Currently Being ModeratedJun 1, 2011 8:04 PM (in response to amgar54)
Boot from the Reinstall Drive (USB thumb drive) that came with your MBA.
(Restart and when you hear the startup sound, hold down the C key until the gray pinwheel appears)
When the OS X window appears, select your language.
On the next screen, select Utilities from the Menu Bar.
To restore to an earlier point in time from a Time Machine backup, select Restore System from Backup
To make your machine look like it did when new, select Disk Utility, then select the system drive and click the Erase button.
This will reformat the drive and you can then reinstall the OS from the main menu.
Currently Being ModeratedFeb 25, 2013 9:38 AM (in response to Maddie02)
Those instructions were for OS X 10.6 - Snow Leopard.
The current version - 10.8 - Mountain Lion has a built-in recovery partition on the hard drive.
Here are Apple's instructions for restoring the OS.