Kansas City, MO—Vanguard Airlines, Inc. (OTC Bulletin Board: VNGD) today announced that the Company has submitted a revised application for federal loan guarantee assistance under the Air Transportation Safety and System Stabilization Act. The revisions were made in response to comments from the Air Transportation Stabilization Board (ATSB).

In the revised application, Vanguard has reduced the percentage of a loan that it is requesting be guaranteed. The Company has also offered compensation to the government for the loan guarantee in the form of cash fees and warrants to purchase a significant stake in the airline.

“Vanguard has put together a comprehensive restructuring package using the federal loan guarantee assistance,” said Scott Dickson, CEO and President of Vanguard Airlines. “Based upon discussions with the ATSB, the Board has indicated it did not support a structure - such as we originally proposed—whereby private at-risk capital was combined with fully-guaranteed bank financing. We have, therefore, revised our application to reduce the federally guaranteed percentage. We have also offered to provide the government significant compensation for the loan guarantee. Vanguard also continues to pursue additional private capital apart from the loan guarantee process.

“We believe our revised application is in direct fulfillment of the intention of the Air Transportation Safety and System Stabilization Act. We do not believe the Act was intended just to lower the cost of borrowing by established airlines who do not need the Act in order to access capital. We believe the intention of the Act is to ensure a viable and competitive airline industry for all Americans, by restoring access to the capital markets to airlines that lost such access as a result of the horrendous tragedy on September 11 and who promote a vigorous and viable national airline industry. We believe there is no airline who is more deserving of this assistance than Vanguard, an airline that offers consumers affordable air fares; that lost financing as a result of the September 11 attacks; and that has itself been the target of allegedly predatory activities by a major airline. Despite the September attacks, we have continued our substantial progress in completing Vanguard’s business turnaround, with dramatically improved reliability and customer service, and significant year-over-year increases in load factor.

“The federal guarantees we are seeking are a very small investment compared to the very large savings Vanguard creates for the American public through our impact on competition, and a very small investment compared to the federal grants already extended to the nation’s largest airlines. We believe the approval of our revised loan guarantee application is in the best interest of the traveling public and the American airline industry.”

Vanguard Airlines, Kansas City’s Hometown Airline, provides convenient all-jet service to 15 cities nationwide: Atlanta, Austin, Buffalo/Niagara Falls, Chicago-Midway, Colorado Springs, Dallas/Ft. Worth, Denver, Fort Lauderdale, Kansas City, Las Vegas, Los Angeles, New Orleans, New York-LaGuardia, Pittsburgh and San Francisco. Service to Fort Lauderdale began on December 10 and service to Colorado Springs began on December 20. Vanguard offers low fares with no advance-purchase requirements, advanced seat assignment and extra legroom on all flights, with a fleet of eight Boeing 737s and five Boeing MD-80-series aircraft which feature SkyBoxä Business Class service. For more information or to make reservations online, visit Vanguard’s Web site at www.flyvanguard.com.

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