UNITED STATES
               SECURITIES AND EXCHANGE COMMISSION
                     Washington, D.C. 20549


                           FORM 10-Q



(Mark One)


( X )     QUARTERLY  REPORT PURSUANT TO SECTION 13 OR 15(D) OF
          THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD
          ENDED MARCH 31, 2000


                               OR


(    )    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
          THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION
          PERIOD FROM         TO        .
                      -------    -------

                   Commission File Number 0-27034


                      VANGUARD AIRLINES, INC.
     (Exact name of Registrant as specified in its charter)


  Delaware                          48-1149290
 (State or other jurisdiction       (I.R.S. Employer
  of incorporation or organization)  Identification Number)



                     533 Mexico City Avenue
               Kansas City International Airport
                     Kansas City, MO  64153
                         (816) 243-2100
  (Address of principal executive offices, including zip code;
      Registrant's telephone number, including area code)


     Indicate by check mark whether the Registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the Registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

                Yes     X             No
                     --------            ------

     At March 31, 2000, there were 17,109,046 shares of Common
Stock, par value $0.001 per share, issued and outstanding.

<PAGE>

PART I. - FINANCIAL INFORMATION
  ITEM 1. FINANCIAL STATEMENTS

<TABLE>
                     VANGUARD AIRLINES, INC.
                         BALANCE SHEETS


                                  MARCH 31,       DECEMBER 31,
                                    2000             1999
                                -------------    ------------
<S>                             <C>              <C>
ASSETS

Current assets:
 Cash and cash equivalents,
  including restricted cash
  of $302,723 at March 31, 2000 $4,595,590       $6,440,684
 Accounts receivable, less
  allowance of $96,000           2,632,408        1,295,515
 Inventories                     1,264,150        1,321,047
 Current portion of
  supplemental maintenance
  deposits                       5,829,802        5,351,279
 Prepaid expenses and other
  current assets                 2,093,233        1,835,125
                                ----------       ----------
Total current assets            16,415,183       16,243,650


Property and equipment, at cost:
 Aircraft improvements and
  leasehold costs                8,379,601        7,626,144
 Reservation system and
  communication equipment        1,804,783        1,804,783
 Aircraft engines and rotable
  inventory                      8,101,604        7,763,835
 Other property and equipment    4,961,737        4,777,339
                                ----------       ----------
                                23,247,725       21,972,101
 Less accumulated depreciation
  and amortization             (11,884,933)     (11,122,590)
                               ------------      ------------
                                11,362,792       10,849,511


Other assets:
 Supplemental maintenance
  deposits, less current
  portion                       4,228,280         4,168,617
 Deferred debt issuance costs     536,279           595,038
 Leased aircraft deposits       3,758,000         3,428,000
 Fuel and security deposits       708,780           708,030
 Other                          1,552,663         1,710,322
                                ----------       ----------
                               10,784,002        10,610,007
                               ----------        ----------

Total assets                  $38,561,977       $37,703,168
                              ===========       ===========
</TABLE>
<PAGE>
<TABLE>

                           VANGUARD AIRLINES, INC.
                          BALANCE SHEETS (CONTINUED)


                                  MARCH 31,       DECEMBER 31,
                                    2000              1999
                                ------------      ------------
<S>                             <C>               <C>

LIABILITIES AND STOCKHOLDERS'
  EQUITY (DEFICIT)

Current liabilities:
 Accounts payable               $  6,897,877      $  7,357,821
 Accrued expenses                  5,286,076         4,701,841
 Accrued maintenance              10,639,408        10,057,044
 Air traffic liability            15,823,427         8,649,452
 Current portion of capital
  lease obligations                  242,776           188,692
                                  ----------         ---------
Total current liabilities         38,889,564        30,954,850

Accrued maintenance, less
  current portion                  5,111,609         4,713,701
Capital lease obligations,
  less current portion               356,127           356,755

Commitments and contigencies

Stockholders' equity (deficit):
 Common stock, $.001 par value:
  Authorized shares - 200,000,000
  Issued and outstanding
   shares - 17,107,617                17,108            17,108
 Preferred stock, $.001 par value:
  Authorized shares -  2,000,000
  Issued and outstanding shares -
   302,362                               302               302
  Liquidation preference -
   $3,023,620
 Additional paid-in capital       78,099,912        77,979,912
 Accumulated deficit             (83,912,645)      (76,319,460)
                                ------------      ------------
Total stockholders' equity
 (deficit)                        (5,795,323)        1,677,862
                                ------------      ------------
Total liabilities and
 stockholders' equity
 (deficit)                     $ 38,561,977      $ 37,703,168
                                ===========       ===========


SEE ACCOMPANYING NOTES.
</TABLE>
<PAGE>

<TABLE>

                                    VANGUARD AIRLINES, INC.
                                   STATEMENTS OF OPERATIONS

                                      THREE MONTHS ENDED
                                           MARCH 31,
                                      ------------------
                                   2000             1999
                              ------------      -------------
<S>                           <C>               <C>
Operating revenues:
 Passenger revenues           $ 26,686,476      $ 23,469,110
 Other                           1,755,952         1,437,906
                               -----------       -----------
Total operating revenues        28,442,428        24,907,016

Operating expenses:
 Flying operations               6,791,501         4,726,470
 Aircraft fuel                   8,122,394         2,886,569
 Maintenance                     6,260,761         5,093,549
 Passenger service               2,102,799         1,563,434
 Aircraft and traffic servicing  5,988,268         4,302,249
 Promotion and sales             4,979,586         4,332,172
 General and administrative        971,152           956,973
 Depreciation and amortization     762,343           931,692
                                -----------       -----------
 Total operating expenses       35,978,804        24,793,108
                                -----------       -----------

Operating income (loss)         (7,536,376)          113,908

Other income (expense):
 Deferred debt issuance cost
   amortization                   (178,759)         (113,198)
 Interest expense                  (13,732)              ---
 Interest income                   132,380           121,524
 Other                               3,302            (9,345)
                                -----------       -----------

Total other expense, net           (56,809)           (1,019)
                                -----------       -----------

Net income (loss) before
  income taxes                  (7,593,185)          112,889

Provision for income taxes             ---            71,500
                                -----------       ----------

Net income (loss)             $ (7,593,185)      $    41,389
                              =============      ===========

Net income (loss) per share:
 Basic                        $      (0.44)      $      0.00
                              ============       ===========

 Diluted                      $      (0.44)      $      0.00
                              ============       ===========

Weighted average shares used
 in per share computation:
  Basic                         17,107,617        17,077,256
                              ============       ===========

  Diluted                       17,107,617        19,090,592
                              ============       ===========

SEE ACCOMPANYING NOTES.
</TABLE>
<PAGE>

<TABLE>
                           VANGUARD AIRLINES, INC.
                          STATEMENTS OF CASH FLOWS

                                     THREE MONTHS ENDED
                                           MARCH 31,
                                   -----------------------
                                    2000             1999
                                -------------    --------------
<S>                             <C>              <C>

OPERATING ACTIVITIES
Net income (loss)               $ (7,593,185)    $     41,389
Adjustments to reconcile net
 income (loss) to net cash
 used in operating activities:
  Depreciation                       539,391          577,837
  Amortization                       222,952          353,855
  Compensation related to
   stock options                         ---            8,595
  Debt issuance cost
   amortization                      178,759          113,198
  Changes in operating assets
   and liabilities:
   Restricted cash                  (302,723)      (2,909,737)
   Accounts receivable            (1,336,893)        (760,167)
   Inventories                        56,897         (154,204)
   Prepaid expenses and other
    current assets                  (258,108)         (36,607)
   Supplemental maintenance
    deposits                        (538,186)        (478,897)
   Accounts payable                 (459,944)        (346,697)
   Accrued expenses                  584,235          159,730
   Accrued maintenance               440,724          135,408
   Air traffic liability           7,173,975        3,449,968
   Deposits and other               (173,091)      (1,040,597)
                                  ----------       ----------

Net cash used in operating
  activities                      (1,465,197)        (886,926)

INVESTING ACTIVITIES
Purchases of property and
 equipment                         (628,253)       (1,232,478)

FINANCING ACTIVITIES
Proceeds from exercise of
 stock options and warrants             ---             9,341
Payments on capital lease
  obligations                       (54,367)              ---
                                  ---------        ----------
Net cash provided by
 financing activities               (54,367)            9,341
                                  ----------       ----------
Net decrease in cash
 and cash equivalents            (2,147,817)       (2,110,063)
Cash and cash equivalents
 at beginning of period           6,440,684         7,417,048
                                  ----------       ----------
Cash and cash equivalents
 at end of period (1)           $ 4,292,867      $  5,306,985
                                ===========      ============
</TABLE>
<PAGE>

<TABLE>

                       VANGUARD AIRLINES, INC.
                STATEMENTS OF CASH FLOWS (CONTINUED)


                                        THREE MONTHS ENDED
                                             MARCH 31,
                                             ---------
                                    2000              1999
                                 -------------   ---------------
<S>                              <C>             <C>
SUPPLEMENTAL DISCLOSURES OF
 CASH FLOW INFORMATION:
Cash paid during the period
 for interest                    $      13,731   $           ---
                                 =============   ===============

SUPPLEMENTAL SCHEDULE OF
 NONCASH INVESTING AND
 FINANCING ACTIVITIES:
Aircraft leasehold costs
 associated with accrued
 maintenance                     $     539,548   $      347,000
                                 =============   ==============
Capitalization of capital
 lease obligation                $    107,823    $          ---
                                 ============    ==============
Deferred debt issuance costs
 recorded in conjunction with
 warrants issued                 $    120,000    $      238,000
                                 ============    ==============
SEE ACCOMPANYING NOTES.

(1)  Excludes restricted cash and cash equivalents of $302,723
and $2,909,737 at March 31, 2000 and 1999, respectively.
</TABLE>
<PAGE>

                         VANGUARD AIRLINES, INC.
      CONDENSED NOTES TO UNAUDITED INTERIM FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION

  The financial statements of Vanguard Airlines, Inc. (the
"Company") presented herein, without audit except for balance
sheet information at December 31, 1999, have been properly
prepared pursuant to the rules of the Securities and Exchange
Commission for quarterly reports on Form 10-Q and do not include
all of the information and note disclosures required by generally
accepted accounting principles.  These statements should be read
in conjunction with the financial statements and notes thereto
for the year ended December 31, 1999, included in the Company's
Form 10-K as filed with the Securities and Exchange Commission on
March 31, 2000.

  The balance sheet as of March 31, 2000, the statements of
operations for the three months ended March 31, 2000 and 1999,
and the statements of cash flows for the three months ended March
31, 2000 and 1999 are unaudited but, in the opinion of
management, include all adjustments (consisting of normal,
recurring adjustments) necessary for a fair presentation of
results for these interim periods.  The results of operations for
the three months ended March 31, 2000 are not necessarily
indicative of the results to be expected for the entire fiscal
year ending December 31, 2000.

The accompanying financial statements have been prepared
assuming that the Company will continue as a going concern.
The Company continues to incur losses and generates negative
cash flows from operations.  In addition, the Company has a
significant working capital deficit.  The Company will require
additional debt or equity financing in 2000.  Two of the Company's
principal stockholders have committed to invest up to $7,500,000.
However, there can be no assurance that the $7,500,000 will be sufficient
to meet the Company's capital needs for 2000 or that future financings
will be available.  These factors raise substantial doubt about
the Company's ability to continue as a going concern.  The
financial statements do not include any adjustments that might
result from the outcome of this uncertainty.

2. EARNINGS PER SHARE

     For the three months ended March 31, 2000 and 1999, the
computation of basic earnings per share was based on the weighted
average number of outstanding common shares.  For the three
months ended March 31, 1999, the computation of diluted earnings
per share was based on the weighted average number of shares and
dilutive potential common shares.  For the three months ended
March 31, 2000 the computation of diluted net loss per share was
based solely on the weighted average number of outstanding common
shares.  Outstanding preferred stock, employee stock options and
warrants were not included in the calculation of diluted loss per
share for the three months ended March 31, 2000, as their effect
was antidilutive.

3. FINANCIAL INSTRUMENTS

     In January 1999, two principal stockholders of the Company
agreed to renew the two-year $4,000,000 letter of credit in favor
of the Company's credit card processor.  As consideration for
renewing the letter of credit, the Company agreed to issue up to
800,000 warrants to purchase shares of the Company's common stock
at an exercise price of $5.00. Upon execution of the letters of
credit, the Company issued 160,800 warrants that vested
immediately. Accordingly, in January 1999, the estimated fair
value of the warrants issued of $238,000 was recorded in other
assets and is being charged to expense over the term of the
facility.  Through March 31, 2000 a total of 477,333 warrants
have been issued under this agreement with a total fair value of
$1,066,000 recorded in other assets.  The remaining warrants vest
quarterly through October 2000 according to the amount of
exposure under such letter of credit, as defined in the
agreement.  In March 2000, the Company established a one-year
$8 million surety bond, which replaced the expired $2.0 million
guaranty, as collateral to additionally secure the credit card
processor.  There were no warrants associated with the surety bond.

4. USE OF ESTIMATES

     The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the amounts reported
in the financial statements and accompanying notes. Actual
results could differ from those estimates.
<PAGE>

ITEM 2. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

EXCEPT FOR THE HISTORICAL INFORMATION CONTAINED HEREIN, THIS
REPORT OF FORM 10-Q CONTAINS FORWARD-LOOKING STATEMENTS THAT
INVOLVE RISKS AND UNCERTAINTIES AND INFORMATION THAT IS BASED ON
MANAGEMENT'S BELIEFS AS WELL AS ASSUMPTIONS MADE BY AND
INFORMATION CURRENTLY AVAILABLE TO MANAGEMENT.  WHEN USED IN THIS
DOCUMENT, THE WORDS "ESTIMATE," "ANTICIPATE," "PROJECT" AND
SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY "FORWARD-LOOKING
STATEMENTS" WITHIN THE MEANING OF THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995.  THE COMPANY'S ACTUAL RESULTS MAY
DIFFER MATERIALLY FROM THOSE CURRENTLY ANTICIPATED.  FACTORS THAT
COULD CAUSE OR CONTRIBUTE TO SUCH DIFFERENCES INCLUDE, BUT ARE
NOT LIMITED TO, AVAILABILITY OF WORKING CAPITAL AND FUTURE
FINANCING RESOURCES, GENERAL ECONOMIC CONDITIONS, THE COST OF JET
FUEL, THE OCCURRENCE OF EVENTS INVOLVING OTHER LOW-FARE CARRIERS,
THE CURRENT LIMITED SUPPLY OF BOEING 737 JET AIRCRAFT AND THE
HIGHER LEASE COSTS ASSOCIATED WITH SUCH AIRCRAFT, POTENTIAL
CHANGES IN GOVERNMENT REGULATION OF AIRLINES OR AIRCRAFT AND
ACTIONS TAKEN BY OTHER AIRLINES PARTICULARLY WITH RESPECT TO
SCHEDULING AND PRICE IN THE COMPANY'S CURRENT OR FUTURE ROUTES.
FOR ADDITIONAL DISCUSSION OF SUCH RISKS, SEE "FACTORS THAT MAY
AFFECT FUTURE RESULTS OF OPERATIONS."

COMPANY

     The Company was incorporated on April 25, 1994 and operates
as a low-fare, short- to medium-haul passenger airline that
provides convenient scheduled jet service to attractive
destinations in established markets in the United States.  The
Company's flight operations began on December 4, 1994.  The
Company currently operates fourteen leased Boeing 737-200 jet
aircraft. The Company's current schedule provides an average of
100 daily weekday flights serving Kansas City, Atlanta,
Buffalo/Niagara Falls, Chicago-Midway, Dallas/Fort Worth, Denver,
Minneapolis/St. Paul, Pittsburgh and Myrtle Beach.  The Company
also provides limited charter services.

     The Company's operating revenues are derived principally
from the sale of airline services to passengers and are
recognized when transportation is provided.  Total operating
revenues are primarily a function of fare levels and the number
of seats sold per flight.  The Company's business is
characterized, as is true for the airline industry generally, by
high fixed costs relative to operating revenues and low profit
margins.  The Company's principal business strategy is to provide
airline services in established, high passenger-volume markets
that are not served by other low-fare airlines.

  The primary factors expected to affect the Company's future
operating revenues are the Company's ability to offer and
maintain competitive fares, the reaction of existing competitors
to the continuation or commencement of operations by the Company
in a particular market (including changes in their fare
structure, aircraft type and schedule), the possible entry of
other low-fare airlines into the Company's current and future
markets, the effectiveness of the Company's marketing efforts,
the occurrence of events involving other low-fare carriers,
passengers' perceptions regarding the safety of low-fare
carriers, general economic conditions and seasonality factors.
The Company's costs are affected by fluctuations in the price of
jet fuel, scheduled and unscheduled aircraft maintenance
expenses, labor costs, the level of government regulation, fees
charged by independent contractors for services provided, rent
for gates and other facilities, and marketing and advertising
expenses.
<PAGE>

OVERVIEW

THREE MONTHS ENDED MARCH 31, 2000 COMPARED TO THE THREE MONTHS
ENDED MARCH 31, 1999

Selected Financial and Operational Data:
<TABLE>
                                          THREE MONTHS ENDED MARCH 31,
                                          ---------------------------
                                                         $         PERCENT
                               2000          1999      CHANGE      CHANGE
                            -----------   -----------  -------     --------------
<S>                        <C>            <C>          <C>         <C>
Revenue passengers carried  452,378       371,748       80,630       21.7 percent
Revenue passenger miles -
 RPMs (000s)                206,516       173,786       32,730       18.8 percent
Available seat miles -
 ASMs (000s)                345,863       252,391       93,472       37.0 percent
Load Factor                 59.7 percent  68.9 percent    (9.2)pts. (13.4) percent
Average Stage Length            457           467          (10)      (2.1) percent
Miles flown (000s)            2,882         2,086          796       38.2 percent
Block hours flown             9,547         6,993        2,554       36.5 percent
Passenger Yield             $     0.1292  $     0.1350  $   (0.0058) (4.3) percent
Total Revenue per ASM       $     0.0822  $     0.0987  $   (0.0165) (16.7) percent
Operating Expenses per ASM  $     0.1040  $     0.0982  $    0.0058   5.9  percent
Operating cost per blockhour  3,769         3,545          224        6.3 percent
Average fuel cost per gallon $    1.01    $     0.49    $    0.52   106.1 percent
Average size of fleet for
 period                          11.5           9.2          2.3     25.0 PERCENT
</TABLE>

     Net loss for the first quarter 2000 was $7.6 million
compared with net income of $41,000 for the first quarter 1999.
Operating revenue increased $3.5 million for the quarter ended
March 31, 2000 compared with the quarter ended March 31, 1999,
while operating expenses increased $11.2 million.  Fuel costs
increased $5.2 million, or 181 percent.

     Total operating revenues increased 14 percent from $24.9 million
for the quarter ended March 31, 1999 to $28.4 million for the
quarter ended March 31, 2000.  Capacity increased 37 percent from
252,391 available seat miles for the quarter ended March 31, 1999
to 345,863 available seat miles for the quarter ended March 31, 2000.
The number of passengers increased 22 percent from 371,748 in the
quarter ended March 31, 1999 to 452,378 in the quarter ended
March 31, 2000.  Load factor decreased from 69 percent for the
quarter ended March 31, 1999 to 60 percent for the quarter ended
March 31, 2000.  This decrease was primarily the result of a
37 percent increase in the ASMs and only a 22 percent increase
in the number of passengers in the quarter ended March 31, 2000
as compared to the quarter ended March 31, 1999.

     Passenger revenue increased $3.2 million, or 14 percent, for the
quarter ended March 31, 2000 compared with the quarter ended
March 31, 1999, while other revenue increased $0.3 million, or
22 percent, for the same period.  Nonrefundable tickets are realized as
"passenger revenue" when forfeited.  Other revenues, in addition
to mail, cargo and liquor sales, include fees generated as a
result of service charges from passengers who change flight
reservations.  Subject to certain restrictions, a customer must
pay a $75 service charge (increased from $50 in October 1999)
to use the value of the unused reservation for rebooking
transportation for a period of 180 days subsequent to the flight
date.  These service charges were $1.2 million (approximately
4 percent of total operating revenues) and $1.2 million
(approximately 4 percent of operating revenues) in the quarters ended
March 31, 2000 and 1999, respectively.

     The Company's strategic plan to continue to improve its
product includes the delivery of a reliable product with a number
of amenities found on larger, better-known airlines that
specifically cater to price-sensitive business travelers.  Those
amenities include assigned seating, refundable ticket option, greater
legroom, fixed ticket pricing under the Road Warrior Registered
Trademark Program and reasonable frequencies between city pairs.
The Company, however, cannot predict future fare levels,
which depend to a substantial extent on actions of
competitors and the Company's ability to deliver a
reliable product.  When sale prices or other price changes have
been made by competitors in the Company's markets, the Company
believes that it must, in most cases, match these competitive
fares in order to maintain its market share.  The Company
believes that the negative impact of entering new markets and
the use of discounted fares should decrease as the Company
increases its overall revenue base and improves upon its brand awareness.
<PAGE>
   OPERATING EXPENSES

     Expenses are generally categorized as related to flying
operations, aircraft fuel, maintenance, passenger service,
aircraft and traffic servicing, promotion and sales, general and
administrative, depreciation and amortization and other expense,
including interest expense and amortization of deferred debt
issuance costs.  The following table sets forth the percentage of
total operating revenues represented by these expense categories:

<TABLE>
                                        THREE MONTHS ENDED
                                        ------------------
                                           MARCH 31,
                                          ---------
                                     2000             1999
                                     ----             ----

                                PERCENT OF                        PERCENT OF
                                REVENUES        CENTS PER ASM     REVENUES        CENTS PER ASM
                                --------------  -------------     -------------   -------------
<S>                             <C>             <C>               <C>             <C>
Total operating revenues        100.0 PERCENT      8.22 CENTS     100.0 PERCENT   9.87 CENTS
                                =============   =============     =============   =============
Operating expenses:
 Flying operations               23.9 PERCENT      1.96 CENTS      19.0 PERCENT   1.87 CENTS
 Aircraft fuel                   28.6              2.35            11.6           1.14
 Maintenance                     22.0              1.81            20.4           2.02
 Passenger service                7.4              0.61             6.3           0.62
 Aircraft and traffic servicing  21.0              1.73            17.3           1.70
 Promotion and sales             17.5              1.44            17.4           1.72
 General and administrative       3.4              0.28             3.8           0.38
 Depreciation and amortization    2.7              0.22             3.7           0.37
                                --------------  -------------     -------------   -------------
Total operating expenses        126.5             10.40            99.5           9.82
Total other expense, net         (0.20)           (0.02)            0.0           0.00
Income tax expense                0.0              0.00             0.3           0.03
                                --------------  -------------     -------------   -------------
Net income (loss)               (26.7) PERCENT    (2.20) CENTS      0.2 PERCENT   0.02 CENTS
                                =============   =============     =============   =============
</TABLE>

     Flying operations expenses include aircraft lease expenses,
compensation of pilots, expenses related to flight operations
administration, hull insurance and all other expenses related
directly to the operation of the aircraft other than aircraft
fuel and maintenance expenses.  Flying operations expenses
increased 44 percent from $4.7 million (approximately 19
percent of operating revenues) for the quarter ended March 31, 1999
to $6.8 million (approximately 24 percent of operating revenues)
for the quarter ended March 31, 2000.  The increase in flying
operations expenses was primarily the result of an increase in
pilot salaries and increased aircraft rent.  Pilot salaries increased in
anticipation of commencing revenue service with two additional
aircraft in early and mid-March 2000.  Pilots are typically hired
three months prior to flight commencement in order to provide
adequate time for training.  Aircraft rent increased as a result
of the addition of the Company's twelfth and thirteenth aircraft
in March 2000.

     Aircraft fuel expenses include the direct cost of fuel,
taxes and the costs of delivering fuel into the aircraft.
Aircraft fuel expenses increased 181 percent from $2.9 million
(approximately 12 percent of operating revenues) for the quarter ended
March 31, 1999 to $8.1 million (approximately 29 percent of operating
revenues) for the quarter ended March 31, 2000.  Higher fuel
expense is directly related to an increase in cost per gallon in
the quarter ended March 31, 2000 versus 1999.  Average fuel cost per
gallon (including taxes and into-plane costs) increased $0.52 or
106 percent from $0.49 in the quarter ended March 31, 1999 to $1.01 in
the quarter ended March 31, 2000.  A 38 percent increase in miles
flown for the quarter ended March 31, 2000 compared to the quarter
ended March 31, 1999 resulted in the remaining increase in fuel
costs.  The Company will seek to pass on any significant fuel cost
increases to the Company's customers through fare increases
as permitted by then current market conditions; however, there
can be no assurance that the Company will be successful
in passing on increased fuel costs.

     Maintenance expenses include all maintenance-related labor,
parts, supplies and other expenses related to the upkeep of
aircraft.  Maintenance expenses increased 23 percent from $5.1 million
(approximately 20 percent of operating revenues) for the quarter ended
March 31, 1999 to $6.3 million (approximately 22 percent of operating
revenues) for the quarter ended March 31, 2000.  The increase in
maintenance expense is due primarily to the 25 percent growth in the
aircraft fleet size and the accompanying 37 percent increase in block
hours flown.  The total maintenance cost per block hour has
decreased from $728 to $655, or a decrease of 10 percent.  The decrease
on a cost per block hour basis is primarily due to both economies
of scale associated with a larger fleet size and improvements in
component repair and overhaul costs derived from vendor
agreements implemented in the second and fourth quarters of 1999.
The Company deposits supplemental rents with its aircraft lessors
to cover a portion of or all of the cost of its future major
scheduled maintenance for airframes, engines, landing gears and
APUs.  These supplemental rents will vary and are based on flight
hours flown.  The costs of routine aircraft and engine
maintenance are charged to maintenance expense as incurred.
<PAGE>
Maintenance expenses decreased on a cents per ASM basis from
2.02 cents for the quarter ended March 31, 1999 to 1.81 cents for the
quarter ended March 31, 2000.  This decrease in cents per ASM
mainly resulted from spreading maintenance costs over a greater
number of ASMs.

     Passenger service expenses include flight attendant wages
and benefits, in-flight service, flight attendant training,
uniforms and overnight expenses, inconvenienced passenger charges
and passenger liability insurance.  Passenger service expenses
increased 35 percent from $1.6 million (approximately 6 percent of
operating revenues) for the quarter ended March 31, 1999 to $2.1 million
(approximately 7 percent of operating revenues) for the quarter ended
March 31, 2000.  Flight attendant salaries and training increased
in relation to increased capacity during the quarter. Delays in
receiving new aircraft and an increase in the number of
passengers flown resulted in higher inconvenienced passenger
charges for the quarter ended March 31, 2000.

     Aircraft and traffic servicing expenses include all expenses
incurred at the airports for handling aircraft, passengers and
mail, landing fees, facilities rent, station labor and ground
handling expenses.  Aircraft and traffic servicing expenses
increased 39 percent from $4.3 million (approximately 17 percent of
operating revenues) for the quarter ended March 31, 1999 to $6.0 million
(approximately 21 percent of operating revenues) for the quarter ended
March 31, 2000.  The Company began employing its own underwing
servicing Minneapolis/St. Paul during February 1999, and has
realized significant savings.  Since March of 1999, the Company
has added service to Buffalo/Niagara Falls.  Service to
Cincinnati was added in April 1999 and stopped in March 2000 due
to competitive pressures.

     Promotion and sales expenses include the costs of the
reservations functions, including all wages and benefits for
reservations, rent, electricity, telecommunication charges,
credit card fees, travel agency commissions, as well as
advertising expenses and wages and benefits for the marketing
department.  Promotion and sales expenses increased 15 percent from $4.3
million (approximately 17 percent of operating revenues) in the quarter
ended March 31, 1999 to $5.0 million (approximately 18 percent of
operating revenues) in the quarter ended March 31, 2000.  Credit
card processing fees and advertising increased 16 percent, while
commissions decreased 25 percent as a result of a reduction in
commission rates from 8 percent to 5 percent in October 1999.  The
Company continues to rely on its direct advertising methods to attract
its passengers, and therefore, continues to incur significant
advertising expenses each month.  The average promotion and sales
cost per passenger decreased $0.64 or 6 percent from $11.65 in the
quarter ended March 31, 1999 to $11.01 in the quarter ended March
31, 2000.

     General and administrative expenses include the wages and
benefits for the Company's corporate employees and various other
administrative personnel, the costs for office supplies, office
rent, legal, accounting, insurance, and other miscellaneous
expenses.  General and administrative expenses increased 1 percent from
$0.96 million (approximately 4 percent of operating revenues) in the
quarter ended March 31, 1999 to $0.97 million (approximately 3 percent
of operating revenues) in the quarter ended March 31, 2000.

     Depreciation and amortization expenses include depreciation
and amortization of aircraft modifications, ground equipment,
computer and reservation equipment, leasehold improvements and
rotable parts inventory.  Depreciation and amortization expenses
decreased 18 percent from $0.93 million (approximately 4 percent of
operating revenues) in the quarter ended March 31, 1999 to $0.76 million
(approximately 3 percent of operating revenues) in the quarter ended
March 31, 2000.  The decrease in depreciation expense is primarily
the result of certain assets becoming fully depreciated.

     Other expense, net, consists primarily of debt issuance cost
amortization, interest income and interest expense.  The
Company renewed its letter of credit securing the
Company's credit card processor in January 1999.  Under the
arrangement, warrants vest quarterly in amounts
dependent upon the Company's exposure under the letter
of credit, as defined in the agreement.  The warrant's
estimated fair value is recorded as deferred debt
issuance costs and related amortization expense is
recorded over the terms of the related guarantees.  Increases in
interest income for the quarter ended March 31, 2000 compared to
the quarter ended March 31, 1999 were offset by increases in
amortization expense for the warrants described above.
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

     Since inception, the Company has financed its operations and
met its capital expenditure requirements primarily with proceeds
from private sales of equity securities, proceeds from its
initial public offering of Common Stock, proceeds from its public
rights offering, exercise of warrants and the issuance of debt
primarily to its principal stockholders.  As of March 31, 2000,
the Company has received net proceeds from the sale of its equity
securities aggregating approximately $70.3 million.  The
Company's balance sheet reflected cash and cash equivalents of
$4.6 million and a working capital deficit of $22.5 million as of
March 31, 2000.

     In January 1999, two principal stockholders of the Company agreed
to renew a two-year $4.0 million letter of credit facility to secure
the Company's credit processor.  In March 2000, the Company
established a one-year $8 million surety bond, which replaced
the expired $2.0 million guaranty, as collateral to additionally
secure the credit card processor.  As a result, approximately
$6 million was released by the Company's credit processor from a
restricted cash account to the Company's operating account.  At
March 31, 2000, the credit card exposure was more than $12
million and, consequently, the Company had $303,000 held as
restricted cash.  In 2000, to the extent that exposure exceeds
$12.0 million, the Company must deposit cash from ticket sales as
collateral to secure the Company credit card processor.  The
Company estimates that its credit card exposure will range
between $10.0 and $13.0 million through the end of the third
quarter when the balance should decline due to expected
seasonality. Any cash utilized as collateral will be refunded by
the credit card processor, on a daily basis, when the Company's
exposure falls below the previously calculated exposure or $12.0
million.

     The Company estimates that scheduled heavy maintenance of
its existing aircraft fleet through December 2000 will cost $8.2
million, of which $2.0 million will be funded from existing
supplemental rent payments recoverable from aircraft lessors.  In
addition, the Company expects to expend $4.6 million on various
capital expenditures in the next year, which are primarily
related to improvements for existing aircraft, increased aircraft
parts inventory levels, additional heavy ground equipment and
improvements to its in-house computer systems.

     In November 1999, the Company entered into a letter of
intent for the lease of six additional Boeing 737-200 jet
aircraft.  The Company accepted three of the six aircraft on
March 4, 2000, March 21, 2000 and April 6, 2000, respectively.
The Company expects to accept the fourth of these six aircraft in May
2000.  The Company must deposit with the lessor or establish a
letter of credit in the aggregate amount of $330,000 for the
remaining aircraft expected in December 2000 and February 2001.
As of May 1, 2000, the Company had placed deposits totaling
$660,000 with the lessor.

     The Company will require additional debt or equity financing
in 2000.  Two of the Company's principal stockholders have
committed to invest up to $7,500,000.  There can be no assurance
that the $7,500,000 will be sufficient to meet the Company's capital needs
for 2000.  Our stockholders will likely experience significant dilution
in connection with the anticipated financing.  Failure to
raise additional funds in the future could result in the Company
significantly curtailing or ceasing operations.  The Company's
success in implementing actions designed to achieve long-term
profitability and its ability to operate at profitable levels
will determine if the Company will be able to raise additional
capital.  There can be no assurance that management can provide
for the Company's necessary capital requirements or that
principal stockholders will continue to provide financing.
Please see "Factors that May Affect Future Results of Operations"
below.
<PAGE>

IMPACT OF THE YEAR 2000

     The Company has completed all significant aspects of its
Year 2000 project.  The Company's Year 2000 project encompassed
information technology systems as well as embedded technology
assets along with assessments of material third-party
relationships and associated risks.

     All of the Company's internal systems and software,
including virtually all software and services provided by third
parties, appropriately handled the Year 2000 date changeover and
the Company's operations were also unaffected.  While the Company
has experienced no Year 2000 related disruptions to date, there
are remaining risks associated with the Year 2000 issue and the
Company continues to monitor possible future implications of Year
2000 issues.  Based on currently available information,
management believes that Year 2000 related disruptions, if any,
will not have a material adverse effect on the Company's
financial condition or results of operations.

QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

MARKET RISK SENSITIVE INSTRUMENTS AND POSITIONS

     The risk inherent in the Company's market risk sensitive
position is the potential loss arising from an adverse change in
the price of fuel as described below. The sensitivity analysis
presented does not consider either the effects that such an
adverse change may have on overall economic activity or
additional actions management may take to mitigate its exposure
to such a change. At the present time, management does not
utilize fuel price hedging instruments to reduce the Company's
exposure to fluctuations in fuel prices. Actual results may
differ.

     The Company's earnings are affected by changes in the price
and availability of aircraft fuel. Market risk is estimated as a
hypothetical 10 percent increase in the average cost per gallon
of fuel over the past twelve months. Based on actual fuel usage
over the past twelve months, such an increase would have resulted
in an increase to aircraft fuel expense of approximately $2.5
million over the past twelve months. Comparatively, based on
projected fuel usage over the next twelve months, such an
increase would result in an increase to aircraft fuel expense of
approximately $3.2 million over the next twelve months. The
increase in exposure to fuel price fluctuations in the next year
is due to the Company's plan to increase its average aircraft
fleet size and related gallons purchased.

FACTORS THAT MAY AFFECT FUTURE RESULTS OF OPERATIONS

     Vanguard's business operations and financial results are
subject to various uncertainties and future developments that
cannot be predicted.  Certain of the principal risks and
uncertainties that may affect Vanguard's operations and financial
results are identified below.

     LIMITED OPERATING HISTORY; HISTORY OF SIGNIFICANT LOSSES.
The Company has a limited history of operations, beginning flight
operations on December 4, 1994.  Since the Company's inception on
April 25, 1994 and until 1997, the Company incurred significant
losses from operations.  In 1998, the Company recorded income
from operations of $1.5 million and generated positive cash flow
from operations of $6.0 million.  In 1999, the Company recorded a
loss from operations of $5.0 million and generated positive cash
flow from operations of $3.3 million.  As of March 31, 2000 the
Company had an accumulated deficit of $83.9 million, a working
capital deficit of $22.5 million and a stockholders' deficit
of $5.8 million.  The Company's limited operating history
makes the prediction of future operating results difficult.
There can be no assurance that the Company will be able to
consistently achieve profitable operations.

     AVAILABILITY OF WORKING CAPITAL AND FUTURE FINANCING
RESOURCES.  The airline business is extremely capital intensive,
including, but not limited to, lease payment obligations and
related maintenance requirements for existing or additional
aircraft.  Historically, the Company's continued operations have
been dependent upon equity and debt financings from its principal
stockholders.  There can be no assurance that the Company's
principal stockholders will provide working capital for the
Company's operations if the Company is unable to continue to
generate positive cash flow from its operations.  Any inability
to obtain additional financing when needed could require the
Company to cease or significantly curtail operations and would
have a material adverse effect on the Company's business,
<PAGE>
financial condition and results of operations.  See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources."

     ABILITY TO CONTINUE AS A GOING CONCERN; EXPLANATORY
PARAGRAPH IN ACCOUNTANTS' REPORT.  The report issued by the
Company's independent auditors for the year ended December 31,
1999 contains an explanatory paragraph expressing substantial
doubt about the Company's ability to continue as a going concern.
The report states that because of the Company's net losses and
working capital deficit, the Company anticipates that additional
debt or equity capital will be required to fund operations in 2000.
The report further states that there can be no assurance as
to the availability of further financing and that there is
substantial doubt about the Company's ability to continue as
a going concern.  See also "Management's Discussion and
Analysis of Financial Condition and Results of Operations --
Liquidity and Capital Resources."

     INTENSE COMPETITION AND COMPETITIVE REACTION.  The Company
is subject to intense competition on all of its routes.  Under
the Deregulation Act, domestic certificated airlines may enter
and exit domestic markets and set fares without regulatory
approval.  All city-pair domestic airline markets, except for
those that are slot-controlled, are generally open to any
domestic certificated airline. Airlines compete primarily with
respect to fares, schedules (frequency and flight times),
destinations, frequent flyer programs and type (jet or propeller)
and size of aircraft.  The Company competes with various other
airlines on its routes and expects to compete with other airlines
on any future routes.  Most of the Company's competitors are
larger and have greater name recognition and financial resources
than the Company.  In response to the Company's commencement of
service in a particular market, competing airlines have, at
times, added flights and capacity and lowered their fares in the
market, making it more difficult for the Company to achieve
profitable operations in such markets.  In the future, other
airlines may set their prices at or below the Company's fares or
introduce new non-stop service between cities served by the
Company in attempts to prevent the Company from achieving or
maintaining profitable operations in that market.

     FUEL COSTS.  The cost of jet fuel is one of the largest
operating expenses for an airline and particularly for the
Company due to the relative fuel inefficiency of its aircraft.
Jet fuel costs, including taxes and the cost of delivering fuel
into the aircraft, accounted for approximately 28.6 percent of the
Company's operating expenses for the quarter ended March 31,
2000.  The cost of jet fuel has risen dramatically in the past
twelve months.  The Company's average cost per gallon for the
past three years have been $0.74 per gallon in the year ended
December 31, 1997, $0.58 per gallon in the year ended December
31, 1998, and $0.67 for the year ended December 31, 1999.  The
Company's average cost per gallon for the quarter ended March 31,
2000 was $1.01.  Jet fuel costs are subject to wide fluctuations
as a result of disruptions in supply or other international
events.  The Company cannot predict the effect on the future
availability and cost of jet fuel.  The Boeing 737-200 jet
aircraft is relatively fuel inefficient compared to newer
aircraft.  Accordingly, a significant increase in the price of
jet fuel has resulted in a disproportionately higher increase in
the Company's fuel expenses as compared with many of its
competitors who have, on average, newer and thus more fuel-
efficient aircraft.  The Company has not entered into any
agreements that fix the price of jet fuel over any period of
time.  Therefore, an increase in the cost of jet fuel will be
immediately passed through to the Company by suppliers.  The
Company has experienced reduced margins at times when the Company
has been unable to increase fares to compensate for such higher
fuel costs.  Even at times when the Company is able to raise
selected fares, the Company has experienced reduced margins on
sales prior to such fare increases.  In addition to increases in
fuel prices, a shortage of supply will also have a material
adverse effect on the Company's business, financial condition and
results of operations.

     CONSUMER CONCERN ABOUT OPERATING SAFETY AT NEW-ENTRANT
CARRIERS OR TYPE OF AIRCRAFT.  Aircraft accidents or other safety-
related issues involving any carrier, may have an adverse effect
on airline passengers' perceptions regarding the safety of new-
entrant, low-fare carriers.  As a result, any such future event
could have a material adverse effect on the Company's business,
financial condition and results of operations, even if such
events do not include the Company's operations or personnel.
Similarly, publicized accounts of mechanical problems or
accidents involving Boeing 737s or other aging aircraft could
have a material adverse effect on the Company's business,
financial condition and results of operations, even though the
Company itself may not experience any such problems with its jet
aircraft.
<PAGE>

     SEASONALITY AND CYCLICALITY.  The Company's operations are
dependent upon passenger travel demand.  Airlines typically
experience reduced demand at various times during the fall and
winter and increased demand for service during the spring and
summer.  Within these periods, the Company experiences variations
in passenger demand based on its particular routes and passenger
demographics.  The Company has experienced reduced demand during
the fall and winter with adverse effects on revenues, operating
results and cash flow. In addition, passenger travel in the
airline industry, particularly leisure travel, is highly
sensitive to adverse changes in general economic conditions.  A
worsening of current economic conditions, or an extended period
of recession nationally or in the regions served by the Company,
would have a material adverse effect of the Company's business,
financial condition and results of operations.

     LIMITED NUMBER OF AIRCRAFT; AIRCRAFT ACQUISITIONS.  The
Company's fleet consists of fourteen aircraft and if one or more
of its aircraft were not in service, the Company would experience
a proportionally greater loss of capacity than would be the case
for an airline utilizing a larger fleet.  Any interruption of
aircraft service as a result of scheduled or unscheduled
maintenance could materially and adversely affect the Company's
service, reputation and financial performance. The market for
leased aircraft fluctuates based on certain worldwide
macroeconomic factors.  There can be no assurance that the
Company will be able to lease additional aircraft on satisfactory
terms or at the times needed.

     GOVERNMENT REGULATION.  The Company is subject to the
Aviation Act, under which the DOT and the FAA exercise regulatory
authority over airlines.  This regulatory authority includes, but
is not limited to: (i) the initial determination and continuing
review of the fitness of air carriers (including financial,
managerial, compliance-disposition and citizenship fitness); (ii)
the certification and regulation of aircraft and other flight
equipment; (iii) the certification and approval of personnel who
engage in flight, maintenance and operations activities; and (iv)
the establishment and enforcement of safety standards and
requirements with respect to the operation and maintenance of
aircraft, all as set forth in the Aviation Act and the Federal
Aviation Regulations.  The FAA has promulgated a number of
maintenance regulations and directives relating to, among other
things, retirement of aging aircraft, increased inspections and
maintenance procedures to be conducted on aging aircraft,
collision avoidance systems, aircraft corrosion, airborne
windshear avoidance systems and noise abatement.  As a result of
recent incidents involving airlines, the FAA has increased its
review of commercial airlines generally and particularly with
respect to small and new-entrant airlines, such as the Company.
The Company's operations are subject to constant review by the
FAA.

     Additional rules and regulations have been proposed from
time to time in the last several years and that, if enacted,
could significantly increase the cost of airline operations by
imposing substantial additional requirements or restrictions on
airline operations. There can be no assurances that any of these
rules or regulations would not have a material adverse effect on
the Company's business, financial condition and results of
operations.

     The Company has obtained the necessary authority to perform
airline operations, including a Certificate of Public Convenience
and Necessity issued by the DOT pursuant to 49 U.S.C. Section
41102 and an air carrier operating certificate issued by the FAA
under Part 121 of the Federal Aviation Regulations.  The
continuation of such authority is subject to continued compliance
with applicable rules, regulations and laws pertaining to or
affecting the airline industry, including any rules and
regulations that may be adopted by the DOT and FAA in the future.
No assurance can be given that the Company will be able to
continue to comply with all present or future rules, regulations
and laws or that such rules, regulations and laws would not
materially and adversely affect the Company's business, financial
condition and results of operations.
<PAGE>

PART II - OTHER INFORMATION

ITEM 1.   LEGAL PROCEEDINGS

       The Company is not involved in any material litigation or
       legal proceedings at this time and is not aware of any
       material litigation or legal proceedings threatened
       against it.

ITEM 2.   CHANGES IN SECURITIES
       a. None.

       b. None.

       c. None

       d. None.

ITEM 3.   DEFAULTS UPON SENIOR SECURITIES

       None.


ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

       None.

ITEM 5.   OTHER INFORMATION

       None.

ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K

       (a)  Exhibits.

       27  Financial Data Schedule

       (b)             Reports on Form 8-K

       None.
<PAGE>

SIGNATURES

      Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.


      Signature and Title                              Date

\S\ ROBERT J. SPANE                                May 14, 2000
-------------------
Robert J. Spane, President and Chief Executive Officer
and Chief Financial Officer
(Principal Accounting Officer)