Indonesia's government is working to arrange a $500 million bridging loan for flag carrier Garuda as the airline seeks to restructure Islamic bonds due to mature next month, a deputy minister said on Monday.

State-owned Garuda has said the coronavirus pandemic has created "an extremely challenging business environment" as countries impose travel restrictions to contain the spread of the virus. It has already secured loans from state lender Bank Rakyat Indonesia.

The airline will present options to investors in talks over restructuring the $500 million sukuk, including on whether to extend the maturity by three to five years, Kartika Wirjoatmodjo, deputy minister of state-owned enterprises, said.

"The $500 million sukuk, we will negotiate for extension. Another $500 million new bridging facility is still being worked on," Wirjoatmodjo said in a text message in response to a query from Reuters.

Bloomberg reported on Monday that as another option Garuda will offer bondholders staggered repayments, in a proposal it will table to investors on May 18, and also cited Wirjoatmodjo as saying a bridge loan was intended to help the airline meet working capital needs for three to six months.

Irfan Setiaputra, Garuda's chief executive, told Reuters by text messages that nothing had been decided in terms of options for the restructuring.

He said a bridge loan had not been secured yet, but confirmed Garuda was in talks to get more bank loans, on top of a facility recently given by Bank Rakyat Indonesia.

Bank Rakyat had agreed on loans of $50 million and 2 trillion rupiah ($134.68 million), as well as a $200 million standby letter of credit for Garuda and its subsidiary airline Citilink to purchase fuel, pay aircraft lease and other operational expenses, Garuda said in a statement last month.

Garuda, which is more than 60% owned by the state, resumed domestic flights last Thursday after authorities eased its ban on air and sea travel.

Last month, in a statement to the stock exchange, Garuda said its first-quarter operational income fell 33% from the same quarter a year earlier, due to a drop in the number of passengers and falling ticket prices.

(Reporting by Bernadette Christina Munthe; Additional reporting by Tabita Diela; Writing by Gayatri Suroyo; Editing by Ed Davies and Susan Fenton)