Kansas City, MO—Vanguard Airlines, Inc. (the “Company” or “Vanguard”) (NasdaqSC: VNGD) announced today that it has signed a Letter of Intent (“LOI”) to lease six Boeing MD-80 series aircraft from Pegasus Aviation with options for two additional aircraft, which would bring the total to eight. Pegasus Aviation will also lease Vanguard two Pratt & Whitney JT8D-219 spare engines. The Company expects to take delivery of two Boeing MD-80 series aircraft in the first quarter of 2001 and two MD-80s and two MD-87s during the remainder of 2001.

Jeff Potter, CEO and President of Vanguard Airlines, said, “As we continue to build our Kansas City hub and evaluate new markets, we found that the MD-80 series aircraft provided the optimal interim solution to improve operational reliability and customer satisfaction while also allowing us to introduce new service to either coast from Kansas City. We are pleased with the strategic partnership that has developed between Vanguard and Pegasus, as demonstrated by their financial commitment both in terms of aircraft and capital. This transaction, together with the recent investment from our two principal stockholders, offers further validation and confirmation of Vanguard’s revised business strategy.”

As part of Pegasus’ commitment to Vanguard, Pegasus affiliate International Aero Components (“IAC”) will provide Vanguard a $3.0 Million Facility secured by existing aircraft spare parts and will make an additional $1.0 Million Facility available for future parts purchases. In addition, IAC will provide spare parts through a consignment agreement in support of the MD-80 series aircraft. Separately, Pegasus has agreed to purchase $3.0 Million of Vanguard Convertible Preferred Stock in a private placement transaction.

“Vanguard has new management and a new business plan that is clear, concise and strategically sound,” said Rich Wiley, President and CEO of Pegasus. “Existing shareholders have stepped up with a new investment. These steps give us the confidence to provide a fleet and support package that effectively meets Vanguard’s specific needs.”

Kansas City-based Vanguard Airlines, which began service in December 1994, is a value-priced, 100 percent ticketless passenger airline. The airline provides convenient, scheduled jet service to thirteen cities: Atlanta, Austin (beginning Jan. 7, 2001), Buffalo/Niagara Falls, Chicago-Midway, Dallas/Ft. Worth, Denver, Kansas City, Los Angeles, Minneapolis/St. Paul, Myrtle Beach, New York-LaGuardia, New Orleans and Pittsburgh. The Company employs approximately 950 full-time equivalent employees and currently operates a fleet of 13 Boeing 737s. For more information on Vanguard, visit the Company’s Web site at www.flyvanguard.com.

Pegasus Aviation, Inc. is the largest, privately held, commercial aircraft leasing company in the world. Founded in 1988, the company is one of the top-tier operating lessors, delivering commercial passenger and freighter aircraft on lease to more than 60 different airlines worldwide. Pegasus owns one of the largest fleets within the leasing industry.

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