Seoul - Korean Air, South Korea's largest air carrier, posted Tuesday an annual net loss of 384.8 billion won ($356.7 million) due to one-off spending to settle price fixing suits and the prolonged decline of its Japan routes.

The flagship national carrier made a loss after a net profit of 256.4 billion won in 2012, and posted an operating loss of 17.6

billion won Äthe first annual operating loss since 2008.

Sales also shrank four percent to 11.8 trillion won, the company said in a statement.

The airline spent 100.6 billion won in settlements in the fourth quarter for two separate lawsuits filed by US passengers and cargo transfer companies over alleged price fixing.

A weakening yen has discouraged Japanese travellers from visiting Korea, cutting demand for flights, and international passenger traffic fell 0.8 percent last year while passengers on its Japanese routes fell 14 percent.

International passenger flights account for more than a half of Korean Air's sales.

The company said however that overall passenger business is expected to improve, boosted by more demand in the Asia region.

The company set its sales target for 2014 at 12.56 trillion won, up seven percent from 2013, with operating profits to top 640 billion won.

(Dow Jones Newswire contributed to this report) - Sapa-AFP