Canada's largest airline, Air Canada (TSX:AC.B), has seen an eventful few years. The airline avoided pension-related insolvency last year and posted a strong rise in profits, driving the stock to multibagger returns.

As fortunes have improved for the airline, long-term strategy is now front and center with fleet modernization at its core.

MAXimum changes
Earlier this week, Air Canada finalized its orders of 61 Boeing (NYSE:BA) 737 MAX aircraft as it looks toward more efficient aircraft for the mainline fleet. The economic side of the 737 MAX is appealing to the airline industry for an estimated 8% decrease in unit cost through maintenance and fuel savings. Although 8% may not sound like that much, in an industry with margins as thin as airline margins, an 8% unit cost reduction is a significant advantage.

Air Canada is far from the only buyer for the 737 MAX. Numerous other airlines have also added their names to the list, including American Airlines Group, Southwest Airlines, United Continental, and Air Canada's top rival, WestJet Airlines.

For Air Canada, the 737 MAX will not only replace older, less efficient aircraft, but it will also mark the entrance of Boeing into Air Canada's narrowbody fleet. Although Air Canada is introducing the Boeing 787 and currently operates numerous Boeing 767 and Boeing 777 aircraft, Airbus Group (NASDAQOTH:EADSY) has held control over Air Canada's narrowbody fleet until the 737 MAX order. For aerospace manufacturing investors, this is yet another part of the ongoing Boeing-Airbus battle to watch.

Next on the shopping list
Air Canada has also been looking to replace part of its regional and smaller jet fleet. Top candidates right now include Embraer SA (NYSE:ERJ) and Bombardier (TSX:BBD.B). Like the Boeing-Airbus rivalry in the larger aircraft market, Embraer and Bombardier are fighting it out for market share and profits in the regional jet market.

Embraer embarked on a program to revamp its regional jet offering by creating a new series of E-Jets. As of Feb. 14, there were a total of 465 E-Jets claimed through orders, options, and letters of interest.

Bombardier has not been as aggressive in updating its series of Canadair Regional Jets, and it has been pouring its development dollars into the new Bombardier C Series. With 201 firm orders and total orders and commitments for 445 aircraft, Bombardier is still trying to reach its goal of 300 firm orders by the beginning of production.

Although Air Canada will still be limited by economic constraints, the C Series may have an edge since both the C Series and Air Canada are Canadian companies. An order from Air Canada would move Bombardier even closer to its goal of 300 firm orders and possibly result in a bump in Bombardier shares. On the other hand, if Bombardier loses that Air Canada deal, investors could react harshly seeing the C Series as failing to succeed even at home.

Manufacturer battle ground
Selling aircraft costing tens or hundreds of millions of dollars requires a keen understanding of the airline industry. At Air Canada, fleet modernization, fueled by changing fortunes and a growth strategy, has led to an order for 61 Boeing 737 MAX aircraft and a sales opportunity for Embraer and Bombardier.

With Air Canada shares still well off their highs because of currency concerns and a disappointing earnings report, investors taking a long-term outlook should consider Air Canada when deciding on airline investments.

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Alexander MacLennan owns shares of Air Canada, American Airlines Group, and Delta Air Lines. He also has options on Delta Air Lines and American Airlines Group. The Motley Fool recommends Embraer. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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