The airline is shedding jobs

The investment will give the group a 31% stake in the airline as part of a restructuring deal.

The deal, if approved, will leave Air Canada's existing shareholders with almost nothing.

Air Canada currently enjoys the sort of protection from creditors that is known as Chapter 11 in the US.

Reforms

In April this year, Air Canada became another victim of the travel slump which followed the September 11 terror attacks.

It sought protection from its creditors as it tried to restructure debts of 13bn Canadian dollars (US$9bn).

The airline has cut back services and put in place plans to cut about 10,000 of its 40,000 staff in an attempt to improve its finances.

The group led by Victor Li beat off competition from US firm Cerberus Capital Management to invest in the airline.

"Given the success of Victor Li in his global business endeavours, we look forward to the opportunity to benefit from his participation in fully realising Air Canada's true potential," said Air Canada's president and chief executive Robert Milton.

The airline said creditors who have claims of up to C$10bn will end up with 56% of the restructured business.

Existing shareholders, however, will end up with just 0.01%.

The agreement is subject to a number of conditions - including resolving the airline's pension deficit - and is also subject to court approval.