Kansas City, MO—Vanguard Airlines, Inc. (the “Company” or “Vanguard”) (NasdaqSC: VNGD) reported today that the Company obtained renewal letters of credit aggregating $4 million that secure the financial institution that processes the Company’s credit card receivables.

In consideration for the extension of the letters of credit, the Company issued to J. F. Shea Co., Inc. and The Hambrecht 1980 Revocable Trust warrants to purchase up to 4,000,000 shares of the Company’s Common Stock. Warrants to purchase 800,000 shares are immediately vested. The remaining warrants vest over a two-year period based on the amount of exposure backed by the letters of credit.

The exercise price for the warrants is $1.17 per share and the warrants expire on February 13, 2008. The warrants contain anti-dilution protection requiring an adjustment of the exercise price upon certain events.

Kansas City-based Vanguard Airlines, which began service in December 1994, is a value-priced, 100 percent ticketless passenger airline. The airline provides convenient all-jet service to 15 cities: Atlanta, Austin, Buffalo/Niagara Falls, Chicago-Midway, Dallas/Ft. Worth, Denver, Kansas City, Las Vegas (beginning April 1), Los Angeles, Minneapolis/St. Paul, Myrtle Beach, New Orleans, New York-LaGuardia, Pittsburgh and San Francisco (beginning April 1). The Company employs approximately 950 full-time equivalent employees and currently operates a fleet of 13 Boeing 737s. For more information, visit the Company’s Web site at www.flyvanguard.com.

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