Kansas City, MO—Vanguard Airlines, Inc. (NasdaqSC: VNGD) announced that last week it filed an application for $60 million in federal loan guarantee assistance under the Air Transportation System and Stabilization Act. Vanguard is seeking the federal guarantee as part of a restructuring program that would provide the Company a total of $80 million of capital. The restructuring program - which is being discussed with investors, lessors and creditors—includes a federally guaranteed loan, new capital from investors in exchange for a significant equity stake in the Company and concessions from aircraft lessors and vendors.

The $60 million loan would be provided, subject to receipt of the federal guarantee, by Westdeutsche Landesbank Girozentrale (WestLB), a recognized leader in worldwide aviation.

“We are very pleased to be able to do business with a bank so well recognized in global airline finance,” said Scott Dickson, Chairman, CEO and President of Vanguard Airlines

“Vanguard has put together a comprehensive restructuring package using the timely assistance of the federal loan guarantees,” continued Dickson. “We have made substantial progress in completing Vanguard’s business turnaround with dramatically improved reliability and customer service, which has already resulted in significant year-over-year increases in load factor despite the economy and the aftermath of September 11. The Vanguard of today bears little resemblance to the Vanguard of even nine months ago. Prior to September 11, we were working with prospective investors to arrange financing to continue our movement toward profitability. As a direct result of the horrendous tragedy, that financing is no longer available. Our employees, stockholders and lessors are all working hard to implement our restructuring plan, but the federal loan guarantee is the key component in our ability to continue providing low fare competition in the airline industry.”

“We, too, are proud to work with Vanguard and the US government in support of rebuilding the US air transportation system following the tragic events of September 11,” said WestLB.

“Encouraging low fare competition has long been a concern of the United States Department of Transportation,” said Dickson. “Vanguard creates substantial savings for the traveling public through the stimulation of low fares and increased competition. Vanguard estimates that we save travelers over $150 million a year by stimulating competition - without creating unhealthy overcapacity in the industry. The DOT has repeatedly recognized the importance of competition in bringing low airfares to the American public. We are that competition, and we make a substantial contribution to the overall efficiency and vitality of the national airline system.

“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 loan guarantee application is in the best interest of the traveling public and the American airline industry.

“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. Considering all the circumstances, we believe there is no airline who is more deserving of this assistance than Vanguard.”

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 (beginning Dec. 20) Dallas/Ft. Worth, Denver, Fort Lauderdale (beginning Dec. 10), Kansas City, Las Vegas, Los Angeles, New Orleans, New York-LaGuardia, Pittsburgh and San Francisco. The airline 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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