Kansas City, MO—Vanguard Airlines, Inc. (NasdaqSC: VNGD) (“Vanguard” or the “Company”) announced today that it completed a $7.5 million private placement of units of securities (the “Units”), each Unit consisting of the Company’s Series B Convertible Preferred Stock, par value $.001 (“Series B Preferred Stock”), and a common stock purchase warrant. The Company converted $3.5 million of outstanding debt and received $4.0 million in cash proceeds. The share price of the newly issued stock when converted to Common Stock was $1.17 per share. The Series B Preferred Stock is convertible into an aggregate 6,410,256 shares of Common Stock at any time. The Company also issued an additional 1,100,505 shares of Common Stock pursuant to anti-dilution protection granted in connection with the private placement of Common Stock completed in September 2000. Also, in accordance with the Certificate of Designation of the Company’s Series A Preferred Stock, the Company adjusted the conversion factor of its outstanding shares of Series A Preferred Stock; the Series A Preferred Stock is now convertible into 2,584,291 shares of Common Stock. As of December 15, 2000, there are a total of 29,566,409 shares of Common Stock and shares immediately convertible into Common Stock outstanding.

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.

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