Airline PT Garuda Indonesia is preparing to propose a 3-year maturity extension to its $500 million Islamic bonds that are coming due on June 3, the company said in a statement late on Tuesday.

Garuda said it has submitted the proposal to Indonesia's Financial Services Authority, as well to bondholders through the Indonesia and Singapore stock exchanges, and the company will seek holders' approval on June 10.

The company is offering up to a 1.25% fee to sukuk holders who vote in favour of its proposal before June 1, according to the exchange filing, adding that a group representing 28% of the holders had indicated they would vote in favour of the proposal.

Garuda is struggling to repay its debt as the coronavirus outbreak disrupts air travel globally.

Global travel restrictions resulted in a 45% drop in the number of passenger in January to April, compared to the same period last year, it said in the filing.

Operational revenue in April dropped 89% from the same month last year and cash flow has turned negative in the first quarter this year, it added.

Garuda has been cutting it expenses to manage liquidity, it said, while "in active and advanced discussions" with the Indonesian government to secure financing support.

(Reporting by Bernadette Christina Munthe; Writing by Fransiska Nangoy; Editing by Muralikumar Anantharaman, Ed Davies)