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, 1996
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)
30 N.W. Rome Circle
Mezzanine Level
Kansas City International Airport
Kansas City, Missouri 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, 1996, there were 8,586,498 shares of Common
Stock, par value $.001 per share.
<PAGE>
Part I. - Financial Information
Item 1. Financial Statements
<TABLE>
Vanguard Airlines, Inc.
Condensed Balance Sheets
<CAPTION>
March 31, 1996 December 31
(unaudited) 1995
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $1,031,511 $3,491,640
Accounts receivable, less allowance 2,263,156 1,271,245
of $197,000 at March 31, 1996 and
December 31, 1995
Inventory 549,085 338,119
Prepaid expenses and other
current assets 4,796,593 4,432,150
Total current assets 8,640,345 9,533,154
Property and equipment, at cost:
Aircraft improvements and leasehold
costs 4,742,118 3,409,633
Reservation system and communication
equipment 1,158,085 884,939
Other property and equipment 1,940,652 1,420,610
7,840,855 5,715,182
Less accumulated depreciation
and amortization (1,531,447) (1,164,364)
6,309,408 4,550,818
Other assets:
Leased aircraft deposits 1,506,000 1,506,000
Fuel and security deposits 933,783 820,213
Other 169,548 15,513
2,609,331 2,341,726
Total assets $17,559,084 $16,425,698
</TABLE>
<PAGE>
<TABLE>
Vanguard Airlines, Inc.
Condensed Balance Sheets (continued)
<CAPTION>
March 31
1996 December 31
(unaudited) 1995
<S> <C> <C>
Liabilities and Stockholders' Equity (Deficit)
Current Liabilities:
Notes payable $500,000 ----
Accounts payable 4,543,680 3,400,288
Accrued expenses 2,727,033 2,303,377
Accrued maintenance 3,829,990 4,728,557
Air traffic liability 6,346,499 2,260,721
Current portion of capital
lease obligations 162,948 101,989
Total current liabilities 18,110,150 12,794,932
Notes payable, less current portion 500,000 ----
Capital lease obligations,
less current portion 106,110 86,133
Commitments
Stockholders' Equity (Deficit):
Common Stock, $.001 par value:
Authorized shares - 15,000,000:
Issued and outstanding shares
- 8,583,998 in 1996 and 8,524,376
in 1995 8,584 8,524
Additional paid-in capital 19,310,177 19,301,937
Accumulated deficit (20,348,054) (15,637,987)
(1,029,293) 3,672,474
Deferred stock compensation (127,841) (127,841)
Treasury stock (42) ----
Total stockholders' equity (deficit) (1,157,176) 3,544,633
Total liabilities and
stockholders' equity (deficit) $17,559,084 $16,425,698
</TABLE>
<PAGE>
<TABLE>
Vanguard Airlines, Inc.
Statements of Operations
For the Three-month Periods Ended March 31, 1996 and 1995
(unaudited)
<CAPTION>
1996 1995
<S> <C> <C>
Operating revenues:
Passenger revenues $13,436,281 $5,785,282
Other 755,234 257,323
Total operating revenues 14,191,515 6,042,605
Operating expenses:
Flying operations 3,866,013 1,742,920
Aircraft fuel 3,051,542 1,364,432
Maintenance 2,594,579 1,131,544
Passenger service 1,258,645 741,899
Aircraft and traffic servicing 3,685,189 1,918,022
Promotion and sales 3,351,324 2,260,374
General and administrative 737,459 627,857
Depreciation and amortization 367,083 185,727
Total operating expenses 18,911,834 9,972,775
Operating loss (4,720,319) (3,930,170)
Other income (expense):
Interest income 26,224 15,147
Interest expense (15,972) (6,222)
Total other income (expense), net 10,252 8,925
Net loss $(4,710,067) $(3,921,245)
Net loss per share $(0.55) $(0.58)
Weighted average common and common
equivalent shares outstanding 8,583,998 6,813,000
</TABLE>
<PAGE>
<TABLE>
Vanguard Airlines, Inc.
Statements of Cash Flows
For the Three-month Periods Ended March 31, 1996 and 1995
(unaudited)
<CAPTION>
1996 1995
<S> <C> <C>
Operating activities:
Net loss $(4,710,067) $(3,921,245)
Adjustments to reconcile net loss
to net cash used in operating
activities:
Depreciation and amortization 367,083 185,727
Changes in operating assets
and liabilities:
Accounts receivable (991,911) (293,989)
Inventory (210,966) (103,060)
Prepaid expenses and other
current assets (364,443) (274,653)
Accounts payable 1,143,392 1,316,126
Accrued expenses and
accrued maintenance (474,911) 1,649,873
Air traffic liability 4,085,778 657,181
Deposits on leased aircraft,
fuel and other (267,605) (12,215)
Net cash used in operating activities (1,423,650) (796,255)
Investing activities:
Purchase of property and equipment (1,010,138) (261,175)
Financing activities:
Proceeds from line of credit ---- 750,000
Proceeds from sale of common stock
and exercise of options 8,300 ----
Purchase of treasure stock (42) ----
Principal payments on capital
lease obligations (34,599) (18,154)
Net cash provided by financing
activities (26,341) 731,846
Net increase in cash and cash
equivalents (2,460,129) (325,584)
Cash and cash equivalents,
beginning of period 3,491,640 1,126,809
Cash and cash equivalents,
at March 31 $1,031,511 $801,225
</TABLE>
<PAGE>
<TABLE>
Vanguard Airlines, Inc.
Condensed Statements of Cash Flows (continued)
For the Periods Ended March 31, 1996 and 1995
(unaudited)
<CAPTION>
1996 1995
<S> <C> <C>
Supplemental disclosures of cash
flow information:
Cash paid during the period for
interest $15,971 $6,222
Supplemental schedule of noncash
investing and financing activities:
Capital leases entered into for
property and equipment $115,535 $18,558
Aircraft improvements financed through
the issuance of notes payable $1,000,000 ----
</TABLE>
<PAGE>
BASIS OF PRESENTATION
The consolidated financial statements of Vanguard Airlines,
Inc. (the "Company") presented herein, without audit except for
balance sheet information at December 31, 1995, have been
properly prepared pursuant to the rules of the Securities and
Exchange Commission for quarterly reports of 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 consolidated financial
statements and notes thereto for the year ended December 31,
1995, included in the Company's Form 10-K as filed with the
Securities and Exchange Commission on March 30, 1996.
The balance sheet as of March 31, 1996, the statements of
operations for the three months ended March 31, 1996 and 1995,
and the statements of cash flows for the three months ended March
31, 1996 and 1995 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, 1996, are not necessarily indicative of the results to be
expected for the entire fiscal year ending December 31, 1996.
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. THE COMPANY'S ACTUAL RESULTS
COULD DIFFER MATERIALLY. FACTORS THAT COULD CAUSE OR CONTRIBUTE
TO SUCH DIFFERENCES INCLUDE, BUT ARE NOT LIMITED TO, THOSE
DISCUSSED IN THE SECTION TITLED "FACTORS THAT MAY AFFECT FUTURE
RESULTS OF OPERATIONS," AS WELL AS THOSE DISCUSSED ELSEWHERE IN
THE COMPANY'S REPORTS FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION.
RESULTS OF OPERATIONS
Operating revenues
Total operating revenues increased 135% to approximately
$14.2 million in first-quarter 1996 from approximately $6.0
million in first-quarter 1995. In first-quarter 1996 versus
first-quarter 1995, Vanguard's capacity, or available seat miles
("ASMs"), increased approximately 78% to 224 million miles from
126 million miles as a result of a 60% increase in fleet size. As
of March 31, 1996, the Company operated eight Boeing 737 aircraft
compared to five on March 31, 1995. Results for the quarter
include the positive revenue impact of Vanguard's capacity-control,
yield management system, which was implemented in
January. The system enhances the Company's ability to
economically offer lower fares. Revenue passenger miles
("RPMs") increased approximately 117% to 128 million miles in
first-quarter 1996 from 59 million miles in first-quarter 1995.
Load factor increased to 57.35% in first-quarter 1996 from
47.18% in first-quarter 1995. Passenger yield increased to
$0.1048 per RPM in first-quarter 1996 from $0.0977 in first-quarter
1995.
The Company generated other revenues as a result of service
charges from passengers who change or cancel flight reservations.
For a period of ninety days after the flight date, the customer
may use the value of the unused reservation for transportation,
less a $25.00 service charge. These revenues were $247,416 in
first-quarter 1996 versus $187,502 in first-quarter 1995. Mail
revenues for first-quarter 1996 and first-quarter 1995 were
$290,214 and $46,058, respectively.
<PAGE>
Operating Expenses
The rapid addition of capacity generated significant growth-
related expenses including employee recruiting and training, new
station opening costs and fleet integration costs. 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, net.
Flying operations expenses include aircraft lease expense,
compensation of pilots, expenses related to flight dispatch and
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 approximately 122% period over period to
approximately $3.9 million in first-quarter 1996 from
approximately $1.7 million. First-quarter 1996 expenses included
the cost of integrating three additional Boeing 737 aircraft into
the fleet. The number of flights increased 75% to 3,777 in
first-quarter 1996 from 2,161 flights in first-quarter 1995 and
block hours increased 69% period over period to 5,326 from 3,150.
Aircraft fuel expenses include the direct cost of the fuel,
taxes and the costs of delivering fuel into the aircraft.
Aircraft fuel expense increased 124% period over period to
approximately $3.1 million in first-quarter 1996 from
approximately $1.4 million in the first quarter 1995. This
increase in fuel expense was a result of the Company increasing
its level of operations as well as an increase in jet fuel
prices. The average price of fuel increased to $0.6106 per
gallon in first-quarter 1996 from $0.5159 per gallon in first-
quarter 1995, while fuel consumption increased 68% to
approximately 4.2 million gallons for first-quarter 1996
from approximately 2.5 million gallons in first-quarter 1995.
Maintenance expenses include all maintenance-related labor,
parts, supplies and other expenses related to the upkeep of
aircraft. Maintenance expenses, including the integration of the
Company's three additional aircraft, increased 143% to
approximately $2.6 million in first-quarter 1996 from
approximately $1.1 million in first-quarter 1995.
Passenger service expenses include flight attendant wages
and benefits, in-flight service, flight attendant training,
uniforms and overnight expenses and passenger liability
insurance. Passenger service expenses increased approximately 75%
to $1.3 million in first-quarter 1996 from $741,899 in first-
quarter 1995 as a result of the Company's increased level of
operations.
Aircraft and traffic servicing expenses include all expenses
incurred at the airports for handling aircraft, passengers and
mail, landing fees, facilities rental, station labor and ground
handling expenses. Aircraft and traffic servicing expenses
increased approximately 95% to approximately $3.7 million in
first-quarter 1996 from approximately $1.9 million in first-
quarter 1995, reflecting primarily the Company's increased level
of operations.
Promotion and sales expenses include the costs of the
reservations function, including all wages and benefits for
reservationists, rent, electricity, communication charges, credit
card fees, travel agency commissions, advertising expenses and
wages and benefits for the marketing department. Promotion and
sales expenses increased approximately 48% to approximately $3.4
million in first-quarter 1996 from approximately $2.3 million in
first-quarter 1995, primarily as a result of increased traffic.
General and administrative expenses include the wages and
benefits for the Company's executive officers and various other
administrative personnel, the costs for office supplies, office
rent, legal expenses, accounting and other miscellaneous
expenses. General and administrative expenses increased
approximately 18% to approximately $737,459 in first-quarter 1996
from approximately $627,857 in first-quarter 1995.
Depreciation and amortization expenses include depreciation
and amortization on aircraft modifications and ground equipment
and leasehold improvements, but does not include any amortization
of start-up and route development costs as all of these costs
have been expensed as incurred. Depreciation and amortization
expenses increased 98% to $367,083 in first-quarter 1996 from
$185,727 in first-quarter 1995.
<PAGE>
Other income (expense), net consists primarily of interest
income and interest expense. Other income (expense), net
consists primarily of interest income and interest expense.
Other income (expense) net increased 15% to $10,252 in first-
quarter 1996 from $8,925 in first-quarter 1995.
LIQUIDITY AND CAPITAL RESOURCES
Since inception, the Company has financed its operations,
capital expenditure requirements and working capital needs
primarily from the sale of equity securities, having generated
$6,018,480 from private sales of equity securities and
$12,955,981 in net proceeds from its initial public offering. As
of March 31, 1996, the Company had cash and cash equivalents of
$1,031,511 compared to $3,491,640 as of December 31, 1995.
Airlines collect fares from passengers in advance of
providing air transportation. Air traffic liability represents
collected and uncollected amounts for future air transportation
that has not yet been provided to passengers. At March 31, 1996,
and December 31, 1995, the Company had recorded approximately
$6.4 million and approximately $2.3 million, respectively, of air
traffic liability. In addition, the Company accrues and will
continue to accrue maintenance liabilities in advance of future
major scheduled maintenance expenditures. At March 31, 1996 and
December 31, 1995, the Company had accumulated approximately $5.1
million and $4.7 million, respectively, of accrued maintenance
costs. These accruals reflect the Company's increase in
operations. The Company had a working capital deficit of
approximately $9.4 million for first-quarter 1996 and $3.3
million for fourth-quarter 1995.
In March 1996, the Company made cash down payments of
$260,000 and signed promissory notes totaling $1,000,000 to
finance the purchase of two aircraft engines. These notes bear
interest at a rate per annum equal to 12%, and principal and
interest payments are due in 24 consecutive monthly installments
of $49,072. The engines serve as collateral on this debt.
Future debt principal payments under the terms of these
promissory notes are approximately $307,000 in 1996, $509,000 in
1997 and $184,000 in 1998.
FACTORS THAT MAY AFFECT FUTURE RESULTS OF OPERATIONS
Limited Operating History; History of Losses; Future Operating
Results Uncertain; Working Capital Deficit. The Company's
limited operating history makes the prediction of future
operating results difficult or impossible. The Company's future
operating results will depend on may factors, including general
economic conditions, the cost of jet fuel and actions taken by
other airlines particularly with respect to pricing. A negative
change in any one or more of these factors could have a material
adverse effect on the Company's business, financial condition or
results of operations. There can be no assurance that the Company
will achieve or sustain profitability at any time in the future.
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, an airline may experience
variations in passenger demand based on its particular routes and
passenger demographics. Due to the Company's limited operating
history, the Company is unable to predict, and to what extent,
seasonal variations in its operations will differ from those of
the airline industry generally. If the Company's demand patterns
are similar to those of the airlines industry generally, the
Company would experience reduced demand during the fall and
winter with adverse effects on revenues, operation 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 services by the Company, could have
a material adverse effect of the Company's business, financial
condition or results of operations.
Adverse Industry Conditions. The airline industry is
characterized generally by high fixed costs relative to revenues,
and low profit margins. As a result, profit levels are highly
sensitive to changes in fuel costs (which comprise a substantial
portion of operating expenses), fare levels and passenger demand.
Fare levels and passenger demand in the airline industry have
been, at times, adversely affected by, among other things, the
general state of the economy, the economic conditions in markets
in which an airline operates and actions taken by other carriers
with respect to fare <PAGE> levels. The enactment of the Airline
Deregulation Act of 1978 (the "Deregulation Act") substantially
eliminated government authority to regulate domestic routes and
fares. Since the enactment of the Deregulation Act, the airline
industry has been subject to intense competition, both from
traditional carriers and new low-cost carriers, which generally
has reduced fare levels and earnings. These factors, combined
with the most recent general economic recession, resulted in
unprecedented losses in the airline industry, and, as a
consequence, many restructurings, bankruptcies and liquidations
in the industry. In recent years, Continental Airlines, America
West Airlines, and Trans World Airlines, among others, have
filed for bankruptcy and Eastern Airlines, Pan American World
Airways and Braniff Airlines, among others, have either ceased
operations or were liquidated. There can be no assurance that
these industry conditions, including intense price competition,
will not adversely affect the Company's business, financial
condition or results of operations.
Competition and Competitive Reaction. Under the Deregulation
Act, domestic certificated airlines are free to enter and exit
domestic markets and to set fares without regulatory approval,
and all city-pair domestic airline markets are generally open to
any domestic certificated airline. As a consequence, the airline
industry is intensely competitive. Airlines compete primarily
with respect to fares, scheduling (frequency and flight times),
destinations, frequent flyer programs and type (jet or propeller
) and size of aircraft. The Company competes with numerous other
airlines on its routes and expects to compete with other airlines
on any future routes. Many of these airlines are larger and have
greater name recognition and greater financial resources than the
Company. In response to the Company's commencement of service to
a particular market, competing airlines have, at times, added
flights and capacity in the market and lowered their fares,
making it more difficult for the Company to achieve or maintain
profitable operations. 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. The Company may also face competition from existing
airlines that may begin serving markets the Company serves, from
new low-cost airlines that may be formed to compete in the low-
fare market (including any airlines that may be formed by
traditional airlines) and from ground transportation
alternatives. Any airline operating under bankruptcy protection
could have a competitive advantage over the Company and there can
be no assurance that this advantage will not adversely affect the
Company's business, financial condition or results of operations.
Fuel. 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
are subject to wide fluctuations as a result of sudden
disruptions in supply. The Company cannot predict the effect of
events on the future availability and cost of jet fuel. The
Boeing 737-200 jet aircraft are relatively fuel inefficient
compared to newer aircraft (such as its Boeing 737-300 jet
aircraft). Accordingly, a significant increase in the price of
jet fuel would result in a disproportionately higher increase in
the Company's fuel expenses as compared with many of its
competitors whose average aircraft is newer and thus more fuel
efficient. The Company has not entered into any agreements which
fix the price of jet fuel over any period of time because such
agreements generally are not available. Therefore, an increase
in the cost of jet fuel will be immediately passed through to the
Company by suppliers and the Company will experience reduced
margins if it is unable to increase fares to compensate for such
higher fuel costs. Even if it is able to raise fares, the
Company will experience reduced margins on sales prior to such
fare increases. In addition to increases in fuel prices, a
shortage of supply would also have a material adverse effect on
the Company's business, financial condition and results of
operations. Effective October 1, 1993, Congress enacted a law
imposing a 4.3 cents per gallon fuel tax, and at the same time
exempted commercial airlines from this tax until September 30,
1995. Since October 1, 1995, all commercial airlines, including
the Company, have been required to pay a tax of 4.3 cents per gallon
of fuel purchased. Congress currently is considering proposed
legislation to reinstate the airline fuel tax exemption, but
there can be no assurances that the fuel tax exemption will be
reinstated.
Government Regulation. The Company is subject to 49 U.S.C.,
Subtitle VII (formerly the Federal Aviation Act of 1958, as
amended) (the "Aviation Act"), under which the United States
Department of Transportation (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; <PAGE> 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. In accordance with the
Deregulation Act, domestic certificated airlines are permitted to
enter and exit domestic markets and to set fares without
regulatory approval, and all city-pair domestic airline markets
are generally open to any domestic certificated airline. The DOT
maintains and exercises authority over consumer protection
issues, computer reservations system issues and unfair trade
practices. The DOT also maintains regulatory authority over
international routes, subject to review by the President of the
United States. The DOT and FAA also enforce federal law with
respect to aircraft noise compliance requirements. The Company's
current fleet exceeds the current Stage-3 noise compliance
requirements with two of its Boeing 737-200 jet aircraft being
equipped with hush kits and its two Boeing 737-300 jet aircraft
satisfying the Stage-3 requirements. The Company's aircraft
fleet is required to meet the following federal Stage-3 noise
compliance deadlines: 25% of its fleet must be Stage-3 compliant
by January 1, 1995; 50% of its fleet must be Stage-3 compliant by
January 1, 1997; 75% of its fleet must be Stage-3 compliant by
January 1, 1999; and 100% of its fleet must be Stage-3 compliant
by January 1, 2000. 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. Additional laws
and regulations have been proposed from time to time and might be
enacted, which could significantly increase the cost of airlines
operations by imposing substantial additional requirements or
restrictions on airlines operations. Laws and regulations have
been considered from time to time and may be enacted that would
prohibit or restrict the ownership and transfer of airline routes
(primarily international routes or landing and takeoff rights
("slots") to operate at certain high-density airports. The
Company has obtained the necessary authority to perform airlines
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 statutes rules and regulations pertaining to or
affecting the airlines 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 and
regulations or that such rules and regulations would not
materially and adversely affect the Company' business, financial
condition and results of operations.
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
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
Exhibit 11- Statement of Computation of Earnings
per Share for the Three-month Periods Ended March
31, 1995 and 1996
<PAGE>
Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K.
On January 5, 1996 the Company filed a report on
Form 8-K under Item 5 - Other Events regarding (i) a
press release issued by the Company on November 6,
1995, announcing the Company's intention to lease
its sixth and seventh aircraft from Aloha Airlines,
(ii) a press release issued by the Company on November
13, 1995, announcing the Company's intention
to lease its eighth aircraft from Mimi, Inc., (iii) a
press release issued by the Company on November 15,
1995, announcing the Company's intention to begin
service to San Francisco, California, and (iv) certain
quarterly operating statistics of the Company for the
quarterly period ended September 30, 1995.
<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. McAdoo May 14, 1996
Robert J. McAdoo, President and
and Chief Executive Officer
/s/ Fred L. deLeeuw May 14, 1996
Fred L. deLeeuw, Vice President-Finance
and Chief Financial Officer and
Secretary (Principal Financial and
Accounting Officer)
<PAGE>
Exhibit 11
LOSS PER COMMON SHARE COMPUTATION
<TABLE>
VANGUARD AIRLINES, INC.
Computation of Earnings per Share for the Three-Month Periods
Ended March 31, 1995 and 1996
<CAPTION>
1996 1995
<S> <C> <C>
Net loss $(4,710,067) $(3,921,245)
Weighted average number of common
shares outstanding during the
period 8,583,998 433,333
Add - common equivalent shares
representing shares issuable
upon the conversion of Series
A Preferred Stock /(2)/ --- 2,000,000
Add - common equivalent shares
representing shares issuable
upon the conversation of Series
B Preferred Stock /(2)/ --- 3,641,043
Add - common equivalent shares
(determined using the "treasury
stock method") representing the
shares issuable upon the exercise
of stock options and warrants
outstanding /(1)/ --- 738,624
Weighted average number of common
and common equivalent shares
outstanding 8,583,998 6,813,000
Net loss per share $(.55) $(.58)
/(1)/ Determined under the provisions of Securities and
Exchange Commission Staff Accounting Bulletin No. 83.
/(2)/ Series A and Series B Preferred Stock converted on
November 3, 1995 in connection with the closing of the
Company's initial public offering of Common Stock.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1996.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 1,031,511
<SECURITIES> 0
<RECEIVABLES> 2,460,156
<ALLOWANCES> 197,000
<INVENTORY> 549,085
<CURRENT-ASSETS> 8,640,345
<PP&E> 7,840,855
<DEPRECIATION> (1,531,447)
<TOTAL-ASSETS> 17,559,084
<CURRENT-LIABILITIES> 18,110,150
<BONDS> 0
0
0
<COMMON> 8,584
<OTHER-SE> (1,029,293)
<TOTAL-LIABILITY-AND-EQUITY> 17,559,084
<SALES> 14,191,515
<TOTAL-REVENUES> 14,191,515
<CGS> 18,901,582
<TOTAL-COSTS> 18,901,582
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 15,972
<INCOME-PRETAX> (4,710,067)
<INCOME-TAX> 0
<INCOME-CONTINUING> (4,710,067)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,710,067)
<EPS-PRIMARY> (.55)
<EPS-DILUTED> (.55)
</TABLE>
