Finnair is outsourcing about one third of its European flying program to British regional low fare carrier Flybe.

The two companies signed a memorandum of understanding that still needs to be changed into a firm contract. The deal is to become effective in October.

The move is part of Finnair’s efforts to return to profitability following years of rising losses. The carrier has launched a €140 million cost saving program that is to be fully implemented in 2014. The measures include the sale of its catering unit, outsourcing engine and component maintenance and reduction of its European fleet by nine aircraft – four Airbus A320s and five Embraer 170s.

While most European network airlines are making losses in the short-haul and European flying programs and have taken steps to turn around, Finnair is the one who is taking the most radical approach. Outsourcing is almost always blocked by pilot scope clause agreements and where that is not the case, airlines shy away from such steps over concerns of brand dilution.

Finnair says it will transfer all of its twelve Embraer 190s to Flybe. The aircraft will be operated on behalf of Finnair and on existing routes. Marketing and sales will be handled by the Finnish carrier, while Flybe will operate the aircraft. According to Finnair, pilots and flight attendants would transfer along with the aircraft, unless negotiations with unions lead to a different agreement. But the carrier says that negotiations on cost savings with pilots have been constructive and if a deal is reached, pilots would return to mainline flying in several stages. They would be trained on Airbus A330s and A340s in use for the airline’s Asian network.

Finnair and Flybe already cooperate in regional operations. The two carriers set up Flybe Nordic, in which Flybe holds a 60% stake and Finnair has the remaining shares.