Kansas City, MO—Vanguard Airlines, Inc. (OTC Bulletin Board: VNGD) today announced fourth quarter and year 2001 results.

For the year ended December 31, 2001, Vanguard reported a net loss of $30.9 million ($0.99 per share) as compared to a net loss of $26.0 million ($1.46 per share) for the year ended December 31, 2000. The net loss for 2001 reflects grant income received under the Air Transportation Safety and System Stabilization Act (ATSSSA) of approximately $7.3 million during the latter part of 2001, $4.8 million in costs arising from the return of leased Boeing 737-200 aircraft and an approximate $4.1 million noncash charge related to the issuance of equity in the second quarter.

Total operating revenues for 2001 decreased ten percent to $118.7 million from $131.8 million in 2000. Total operating expenses for 2001 decreased four percent to $149.9 million from $156.6 million in 2000. The Company’s load factor for 2001 was 65.8 percent, an increase of 11 percent from 59.2 percent in 2000. Traffic for 2001 was 1.1 billion revenue passenger miles (RPMs), an increase of 13 percent from 1.0 billion in 2000. Capacity for 2001 increased to 1.7 billion available seat miles (ASMs), an increase of two percent from 1.6 billion in 2000. Yield for 2001 decreased 19 percent to $0.104 from $0.129 in 2000.

For the quarter ended December 31, 2001, Vanguard reported a net loss of $4.9 million ($0.11 per share), compared to a net loss of $11.0 million ($0.56 per share) in the fourth quarter of 2000. Vanguard’s net loss for the fourth quarter of 2001 reflects grant income received under ATSSSA of $5.0 million and $3.2 million in costs related to the return of leased Boeing 737-200 aircraft. Total operating revenues for the fourth quarter of 2001 decreased three percent to $29.3 million from $30.2 million in fourth quarter 2000. Total operating expenses decreased two percent to $39.7 million from $40.7 million in fourth quarter 2000.

The Company’s load factor for the quarter ended December 31, 2001, was 63.2 percent, an increase of 11.5 percent from 56.7 percent in 2000. Fourth quarter 2001 traffic increased to 269.2 million RPMs, an increase of 14 percent from 236.6 million in 2000. Capacity increased to 426.2 million ASMs, an increase of two percent from 417.6 million ASMs in 2000. Yield for fourth quarter 2001 decreased 13 percent to $0.104 from $0.120 in 2000.

Scott Dickson, Chairman, CEO and President of Vanguard Airlines, said, “Considering the disruption caused by the events of September 11, we are pleased with these results. In particular, we are gratified to see the validation of our business plan with the tremendous growth in Vanguard’s load factor year-over-year and the continued improvement in Vanguard’s yields during the course of 2001. Vanguard’s results reflect the change in route structure completed in March of this year. The higher loads reflect the validity of the revised business plan. The decrease in yields reflects the substantial increase in average length of flight from our revised route structure.

“Financial results for 2001, although disappointing on an absolute basis, need to be considered in light of the impact of September 11 and - importantly for Vanguard - in light of the substantial changes Vanguard implemented in early 2001. In addition to changing its route structure, Vanguard introduced a new fleet type and completely reengineered its host reservation system, switching from Open Skies to the Sabre? global distribution system. The cost of these changes - both in terms of expense items and lost revenues - are now behind us.”

As a result of the tragic events of September 11, 2001, the Company has, to date, been unable to access the unsecured private capital markets. The Company requires additional debt or equity financing to fund ongoing operations in 2002. The Company is seeking to raise additional capital and is applying for federal loan guarantees authorized by the ATSSSA, however, there can be no assurance that such capital can be obtained. The Air Transportation Stabilization Board (ATSB) has raised questions with respect to the Company’s eligibility for a loan, in part on account of the Company’s relatively small scope of operations. The Company is working to demonstrate to the ATSB its eligibility, as well as document the critical role Vanguard plays in both the local and national air transportation markets.

“We believe Vanguard has demonstrated the financial viability of its revised business plan and is clearly helping to maintain a competitive national transportation system,” continued Dickson. “Access to the federal loan guarantees authorized by Congress is important to solving our immediate financial need. The inability to secure additional funding could have a material adverse effect on the Company, including the possibility that the Company could have to cease operations.”

The Company is also seeking to restructure its existing vendor payables, aircraft lease obligations and equity interests. The Company intends to reduce its existing payables by an amount that has not been finally determined and to restructure its aircraft lease obligations to reflect fair market lease values. There can be no assurance that such restructuring can be accomplished. The Company`s Board of Directors has approved a one-for-five reverse stock split that would reduce the number of shares of Vanguard common stock outstanding or reserved for issuance, thereby creating a larger pool of unissued and unreserved shares available for issuance to new investors in connection with the contemplated financings. The issuance of common stock or common stock purchase rights in connection with such restructuring or financings may dilute the interests of existing stockholders.

Vanguard Airlines, Kansas City’s Hometown Airline, provides convenient all-jet service to 18 cities nationwide, including Orlando beginning April 22 and Seattle beginning June 3. The airline offers low fares with no advance-purchase requirements, advanced seat assignment and extra legroom on all flights with a fleet of six Boeing 737s and eight Boeing MD-80-series aircraft, which feature SkyBox? Business Class service. For more information or to make reservations online, visit Vanguard’s Web site at www.flyvanguard.com.

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