Kansas City, MO—Vanguard Airlines, Inc. (NasdaqSC: VNGD) announced first quarter results today.

The Company’s net loss for the three months ended March 31, 2001, was $11.5 million or basic loss per share of $0.56, compared to a net loss of $7.6 million or basic loss per share of $0.44 in the first quarter of 2000. Total operating revenues for the first quarter of 2001 decreased seven percent to $26.5 million from $28.4 million in the first quarter of 2000. Total operating expenses increased three percent to $37.2 million from $36.0 million in the first quarter of 2000.

As compared to the first quarter of 2000, the Company significantly increased its average length of haul in the first quarter of 2001 with the transition to longer-haul flying from a single hub in Kansas City. Although the Company’s average flight length increased 51 percent, its average fares increased 21 percent, resulting in a 20 percent decline in yields.

Passenger traffic increased 16 percent to 238.8 million Revenue Passenger Miles for the first quarter 2001 versus 206.5 million in first quarter 2000. Capacity increased 15 percent to 398.5 million Available Seat Miles from 345.9 million in the first quarter of 2000. Load factor increased 0.2 points to 59.9 percent in the first quarter of 2001 compared to 59.7 percent in the first quarter of 2000.

Scott Dickson, President of Vanguard Airlines, said, “The first quarter is historically a weak quarter for Vanguard. Results were further impacted by the transition to our new business strategy as well as by adverse winter weather and passenger concerns over a slowing economy. We are disappointed in these results, but they are in line with our expectations.

“This was the first quarter we dedicated our operations to an expanded single Kansas City hub serving medium-to-long haul routes. The new routes, which we began introducing in late 2000 through the first part of 2001 will take some time to mature. During the quarter, we also began preparations for the introduction of MD-80 series aircraft and the conversion to the Sabre Reservations System. In addition, changes were made to the upper management team. In light of these extensive changes we expect to see more positive results during the balance of the year. Evidence of the improvement can be seen in our March load factor of 74 percent. Although Vanguard encountered normal disruption in switching its host reservations system on April 22, the transition has been successfully completed and Vanguard’s strong booking trend has continued since then.

“Other key events during the quarter:
* Saw load factor increase from 42% in January 2001 to 74% in March 2001.

* Began training of airport and reservation personnel on the Sabre Reservation System for the conversion completed on April 22, 2001.

* Introduced service to Austin, Texas on January 7, 2001.

* Discontinued service to Minneapolis/St. Paul on March 31, 2001.”
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