Korean Air was hit hard by the outbreak of Middle East respiratory syndrome (MERS) reporting a second quarter net loss of 169.2 billion won ($144 million).
"MERS has had a greater-than-expected impact, scaring off tourists during the traditional off-season," Korean Air said in a statement.
The MERS outbreak which began in late May sparked thousands of trip cancellations with overall inbound tourism slumping more than 40%.
Korean Air, Asiana Airlines and several other foreign carriers were forced to cut services at the height of the outbreak which claimed 36 lives.
No new MERS cases have been reported since early July and South Korea has been officially declared MERS-free.
The South Korea tourism industry is slowly getting back on its feet but could also be affected by the weakening Chinese Yuan.
China is the dominant inbound market and has been growing 40% annually for the last three years.
