Original Article in the New York Times syndication from Bloomberg.

Air Canada should be permitted to continue to operate under bankruptcy protection while it seeks a new investor to replace Trinity Time Investments, a court-appointed monitor said.

The airline told the monitor, Ernst & Young, that it had 952.7 million Canadian dollars ($725 million) in cash on hand and that it expected to have about 1.03 billion Canadian dollars by June, and should be able to operate for several months.

"Accordingly, the monitor is of the view that the applicant should be allowed a period of time to further pursue its restructuring efforts and to commence a process for identifying an alternate equity investor or source of postemergence financing," Ernst & Young said in its report.

Trinity, owned by Victor Li, a Hong Kong businessman, had offered to buy the airline, but it signaled on Friday that it did not expect to complete its investment of 650 million Canadian dollars.

Air Canada, based in Montreal, has said it needs pension concessions from workers to emerge from bankruptcy protection. Trinity has said the airline cannot afford its current benefits plan because of competition from lower-cost carriers like WestJet Airlines and Jetsgo.

Air Canada said that the war in Iraq, the SARS virus and expansion by domestic carriers reduced its 2003 revenue by 1.3 billion Canadian dollars from the previous year.