X-ray spectra of the late-type star AB Dor, obtained with the XMM-Newton satellite are analysed. AB Dor was particularly active during the observations. An emission measure reconstruction technique is employed to analyse flare and quiescent spectra, with emphasis on the Fe XVII 15-17 A wavelength region. The Fe XVII 16.78 A/15.01 A line ratio increases significantly in the hotter flare plasma. This change in the ratio is opposite to the theoretical predictions and is attributed to the scattering of 15.01 A line photons from the line-of-sight. The escape probability technique indicates an optical depth of about 0.4 for the 15.01 A line. During the flare, the electron density is 4.4*10^10 cm^-3 and the fractional Fe abundance is 0.5 +/- 0.1 of the solar photospheric value. Using these parameters a path length of about 8,000 km is derived. There is no evidence for opacity in the quiescent X-ray spectrum of the star.

13 pages, 3 figures, to be published in ApJ Letters