Kansas City, MO—Vanguard Airlines, Inc. (NasdaqSC: VNGD) today announced that it is has satisfied certain conditions to closing of the previously announced equity investment in the Company. The Company’s Board of Directors has approved the investment and NASDAQ has granted the Company an exemption to its marketplace rules allowing the Company to proceed with the transaction without shareholder approval.

As announced on May 1, 2001, a group of existing shareholders of the Company are investing up to $7.5 million in the Company in exchange for newly-issued shares of common stock, at a per share acquisition price of $0.20. NASDAQ granted the exemption due to the Company’s critical need for funding to remain financially solvent. The Company had represented to NASDAQ that, without this funding, the Company would have been required to file for reorganization under Chapter 11 of the Bankruptcy Code.

“This investment demonstrates the confidence of our investors in the Company’s turnaround strategy,” said Scott Dickson, CEO and President of Vanguard Airlines. “Our tremendous employees are equally committed to ensuring our future success. We are taking several steps to increase revenues, including improving our revenue management, adding newer aircraft to the fleet, introducing business class service and refocusing our efforts to be Kansas City’s hometown airline.”

Investors have advanced the Company $4.5 million as loans callable upon demand pending closing of the investment. At closing, the principal amount of such loans will be applied to the purchase of 22.5 million shares of common stock. Up to 37.5 million total shares may be issued at the $0.20 per share price.

In connection with the transaction, existing shareholders of the Company waived certain anti-dilution rights contained in the Company’s preferred stock designations and limited the anti-dilution rights they hold with respect to certain warrants. Post-closing, warrants to purchase approximately 13,500,000 shares of common stock will have an adjusted exercise price of $0.50 per share.

Vanguard Airlines, Kansas City’s Hometown Airline, provides convenient all-jet service to 15 cities nationwide: Atlanta, Austin, Buffalo/Niagara Falls, Chicago-Midway, Dallas/Ft. Worth, Denver, Kansas City, Las Vegas, Los Angeles, Myrtle Beach, New Orleans, New York-LaGuardia, Pittsburgh, Reno/Lake Tahoe(August 12) and San Francisco. The airline offers low fares, advanced seat assignment and extra legroom on all flights with a fleet of three Boeing MD-80s and 10 Boeing 737s. For more information or to make reservations online, visit Vanguard’s Web site at www.flyvanguard.com. Vanguard Airlines, you’ll like where we’re going.

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