ENLARGE Jaguar is responsible for most of PAG's red ink.

"We expect PAG to be profitable this year," said Ford CFO Don Leclair.

It boils down to this: Can Volvo earn more than Jaguar will lose?

In 2006, the four European luxury brands lost $327 million before taxes. That brought their three-year losses to $1.15 billion.

Blame Jaguar for most of the red ink. Ford sources say the British brand has lost $500 million to $1 billion a year since 2001. Jaguar executives concede the unit likely will lose money in 2007 and 2008 as well.

Ford does not break out earnings for individual PAG brands. But insiders say Volvo traditionally shores up the group's bottom line.

Volvo typically has earned $800 million to $1.2 billion a year. Land Rover has begun to eke out a slim profit, sources say.

In 2006, an aging product line hampered Volvo's performance, contributing to losses at the Swedish unit in the second and third quarters.

PAG's lineup of new products "is being very well received," said Ford CEO Alan Mulally. "They are making tremendous progress, all of those brands, on their quality and productivity."

Last year's $327 million loss compared with an $89 million loss in 2005. Leclair said the earnings decline last year "is more than explained by prior-model warranty accrual adjustments at Jaguar and Land Rover, as well as unfavorable currency exchange."

This year's expected pretax profit would not include a one-time gain from the sale of Aston Martin. That deal, which should add about $1 billion to Ford's coffers, is expected to be announced before April.

Three suitors, who have not been publicly identified, are vying for the rights to Aston, which rarely has turned a profit in nearly a century of existence.

You may e-mail Mark Rechtin at mrechtin@crain.com