A 2-hour-old male neonate born to a 28-year-old primigravida at 38 weeks gestation presents with respiratory distress. The delivery was complicated by thick meconium-stained amniotic fluid (MSAF). The infant was vigorous at birth (Apgar 8/10 at 1 min, 9/10 at 5 min) and did not require intubation for meconium aspiration. On examination, the baby has tachypnea (respiratory rate 68/min), intercostal and subcostal retractions, and scattered crackles on auscultation. Chest X-ray shows patchy infiltrates with areas of hyperinflation and a small right-sided pneumothorax. Arterial blood gas shows pH 7.28, PaCO₂ 52 mmHg, PaO₂ 65 mmHg on room air. What is the most appropriate initial management?