British carrier Flybe Group (FLYB.L) will exit its Finnish joint venture with Finnair (FIA1S.HE) after the companies failed to agree on how to increase the unit's profitability, Finnair said on Wednesday.

State-controlled Finnair said Flybe has agreed to sell its 60 percent stake in Flybe Nordic to a new investor or to Finnair for the price of one euro ($1.2481).

Flybe Nordic owns Flybe Finland, which operates a third of Finnair's European traffic.

"Finnair aims to find a new majority shareholder and a business model that would enable the development of regional flying in a financially sustainable way," Finnair Chief Executive Pekka Vauramo said in a statement.

Flybe will exit the joint venture by the end of 2014, and will continue running the operations for 12 months after that.

Flybe last month said it was looking to expand its business taking on some domestic flights from larger airlines so that they can focus on their long-haul routes.

The British regional airline has overhauled itself after it ran into trouble during the recession, and in October said it was on track to grow, having sold its landing slots at London's Gatwick airport, reduced its workforce and cut costs.