The first step is to obtain a relative flux calibration. The second step is to do absolute flux calibration.
If the telluric standard was a hot star, then a blackbody curve can be used to model the continuum of the standard. The spectral type of the star can be used to give an idea of what temperature to use. The blackbody curve is then multiplied into the object spectrum.
For solar type stars, a blackbody curve is a good enough description of the spectral energy distribution above 1.6 microns. Below 1.6 microns, a more accurate description of the continuum is required. The spectral energy distribution of a wide variety of stars are available through ISAAC web pages. The second step is absolute flux calibration. If the magnitude of the target is known and if the spectra were taken with the LR grating, a reasonably accurate calibration can be obtained by convolving the spectrum with the filter curve and determining the appropriate scaling. If neither of the above are true, then determining the absolute flux calibration is more difficult and less certain. Most ISAAC standard star observations are done with the slit the object was observed with and either the 2'' slit or slitless, so slit losses can be roughly estimated. If the standard was not observed with the 2 arc second slit or slitless, slit losses can also be roughly estimated from the image quality in the acquisition image. Alternatively, if the seeing did not change too drastically while the target and the standard were observed, slit losses can be ignored.