<PAGE>
                                                                   EXHIBIT 10.10

                                 AMENDMENT NO. 1
                      TO SOUTHWEST AIRLINES CO. 401(k) PLAN


         Pursuant to the authority of the Board of Directors of Southwest
Airlines Co., and the provisions of Section 17.1 thereof, the Southwest Airlines
Co. 401(k) Plan (the "Plan") is hereby amended in the following respects only,
effective as of January 1, 2002, except as otherwise specifically provided
herein:

         (1) Article IV, Section 4.1 is hereby amended in its entirety,
effective September 1, 2002, to read as follows:

                  "4.1 Salary Reduction Contributions: Each Member may elect to
         have contributed on his behalf to the Trust Fund, on a pre-tax basis,
         any whole percentage of his Annual Compensation which is not less than
         one percent (1%) and which does not exceed fifty percent (50%);
         provided, however, effective January 1, 2002, such amount may not
         exceed the applicable dollar amount as set forth in Section
         402(g)(1)(B) of the Code, adjusted for taxable years of the Member
         beginning after December 31, 2006 for increases in the cost of living
         as provided in Section 402(g)(4) of the Code. Salary Reduction
         Contributions shall be elected pursuant to a salary deferral election,
         in accordance with Section 5.3 hereof. Salary Reduction Contributions
         are at all times one hundred percent (100%) vested and nonforfeitable.
         Salary Reduction Contributions made on behalf of a Member shall be
         added to the Trust Fund as soon as practicable after deduction from a
         Member's paycheck and shall be credited to the Individual Account of
         the Member as of each Valuation Date, as provided in Section 6.1."

         (2) Article IV, Section 4.2 is hereby amended in its entirety,
effective September 1, 2002, to read as follows:

                  "4.2 Company Matching Contributions. The Company may, as
         provided below, contribute to the Trust Fund a Company Matching
         Contribution. Company Matching Contributions shall be determined on
         behalf of Members whose conditions of employment are governed by a
         collective bargaining agreement between the Company and a labor union
         in accordance with the terms of such collective bargaining agreement,
         as then in effect, and shall be determined on behalf of Members whose
         conditions of employment are not so governed, in the sole and absolute
         discretion of the board of directors of the Company. If a Company
         Matching Contribution is made, such Contribution will equal a specified
         percentage of the Member's Salary Reduction Contributions and, if
         applicable, Catch-Up Contributions, not to exceed the specific amount
         set forth in


                                      -1-
<PAGE>


         the collective bargaining agreement, if applicable, or otherwise
         established by the board of directors of the Company. Company Matching
         Contributions shall be added to the Trust Fund as soon as practicable
         after deduction of the applicable Salary Reduction Contributions and,
         if applicable, Catch-Up Contributions from a Member's paycheck and
         credited, as of each Valuation Date, to the Company Matching
         Contribution Account of each eligible Member who has elected to have
         Salary Reduction Contributions and, if applicable, Catch-Up
         Contributions made to the Trust Fund on his behalf during the
         applicable period."

         (3) Article IV, Section 4.4 is hereby amended in its entirety to read
as follows:

                  "4.4 Excess Deferrals: If a Member's Salary Reduction
         Contributions hereunder should exceed the applicable dollar amount as
         set forth in Section 402(g)(1)(B) of the Code, adjusted for taxable
         years of the Member beginning after December 31, 2006 for increases in
         the cost of living as provided in Section 402(g)(4) of the Code, in any
         taxable year of the Member, the excess (with earnings thereon) shall be
         distributed to the Member. If the Member also participates in another
         elective deferral program (within the meaning of Section 402(g)(3) of
         the Code), and if when aggregating his elective deferrals under all
         such programs an excess of deferral contributions arises under the
         dollar limitation in Code Section 402(g) with respect to such Member,
         the Member shall, no later than March 1st following the close of the
         Member's taxable year, notify the Committee as to the portion of such
         excess deferrals to be allocated to this Plan, and such excess so
         allocated to this Plan (with earnings thereon) shall be distributed to
         the Member. In the event there is a loss allocable to an excess
         deferral, any distribution to a Member as required by this Section
         shall be no greater than the lesser of: (a) the value of the Member's
         Salary Reduction Contribution Account or (b) the Member's excess
         deferrals for the Plan Year. Any distribution under this Section shall
         be made to the Member no later than the April 15th immediately
         following the close of the Member's taxable year for which such excess
         deferrals were made."

         (4) The Plan is hereby amended to add Article 21 to read as follows:

                                  "ARTICLE XXI

                 Amendments Pursuant to the Economic Growth and
                      Tax Relief Reconciliation Act of 2001

                  21.1 Preamble:

                           a. Adoption and Effective Date of Amendments: This
                  Article 21 reflects certain provisions of the Economic Growth
                  and Tax Relief Reconciliation Act of 2001 ("EGTRRA"). This
                  Article is intended as good faith compliance with the
                  requirements of EGTRRA and is to be construed in accordance
                  with EGTRRA and guidance issued thereunder.


                                      -2-
<PAGE>


                  Except as otherwise provided, the provisions of this Article
                  21 shall be effective for Plan Years beginning on or after
                  January 1, 2002.

                           b. Inconsistent provisions superseded: The provisions
                  of this Article 21 shall supersede the provisions of the Plan
                  to the extent those provisions are inconsistent with the
                  provisions of this Article.

                  21.2 Limitations on Contributions: Except to the extent
         permitted under Section 21.3 of this Article and section 414(v) of the
         Code, if applicable, the Annual Additions that may be contributed or
         allocated to a Member's Individual Account under the Plan for any
         Limitation Year shall not exceed the lesser of:

                           a. $40,000, as adjusted for increases in the
                  cost-of-living under section 415(d) of the Code, or

                           b. 100% of the Member's compensation, within the
                  meaning of section 415(c)(3) of the Code, for the Limitation
                  Year. The compensation limit referred to in this subparagraph
                  (b) shall not apply to any contribution for medical benefits
                  after separation from service (within the meaning of section
                  401(h) or section 419A(f)(2) of the Code) that is otherwise
                  treated as an Annual Addition.

                  21.3 Catch-Up Contributions:

                           a. Eligibility for Catch-Up Contributions: Effective
                  September 1, 2002, all Members who are eligible to make Salary
                  Reduction Contributions under this Plan and who have attained
                  age 50 before the close of the Plan Year shall be eligible to
                  make Catch-Up Contributions in accordance with, and subject
                  to, the limitations of section 414(v) of the Code.

                           b. Effect of Catch-Up Contributions on Plan: Such
                  Catch-Up Contributions shall not be taken into account for
                  purposes of the provisions of the Plan implementing the
                  required limitations of sections 402(g) and 415 of the Code.
                  The Plan shall not be treated as failing to satisfy the
                  provisions of the Plan implementing the requirements of
                  section 401(k)(3), 401(k)(11), 401(k)(12), 410(b), or 416 of
                  the Code, as applicable, by reason of the making of such
                  Catch-Up Contributions."


                                      -3-
<PAGE>


         IN WITNESS WHEREOF, and as conclusive evidence of the adoption of the
foregoing instrument comprising Amendment No. 1 to Southwest Airlines Co. 401(k)
Plan, the Company has caused these presents to be duly executed in its name and
behalf by its proper officers thereunto duly authorized this 22 day of July,
2002.

                                    SOUTHWEST AIRLINES CO.


                                    By: /s/ JAMES F. PARKER
                                       -----------------------------------------
                                       James F. Parker, Chief Executive Officer




ATTEST:

/s/ DEBORAH ACKERMAN
---------------------------------
Deborah Ackerman, Assistant Secretary



                                      -4-
<PAGE>


STATE OF TEXAS      )
                    )
COUNTY OF DALLAS    )

         BEFORE ME, the undersigned, a Notary Public in and for said County and
State, on this 22 day of July, 2002, personally appeared JAMES F. PARKER, to me
known to be the identical person who subscribed the name of SOUTHWEST AIRLINES
CO., as its CHIEF EXECUTIVE OFFICER to the foregoing instrument and acknowledged
to me that he executed the same as his free and voluntary act and deed and as
the free and voluntary act and deed of such organization for the uses and
purposes therein set forth.

         GIVEN UNDER MY HAND AND SEAL OF OFFICE, the day and year last above
written

                                     /s/ NOVIE RAE LEACHMAN
                                   ---------------------------------------------
                                   Notary Public in and for the State of Texas



My Commission Expires: 05/22/05
                      ----------


                                      -5-
<PAGE>
                                 AMENDMENT NO. 2
                      TO SOUTHWEST AIRLINES CO. 401(k) PLAN


         Pursuant to the authority of the Board of Directors of Southwest
Airlines Co., and the provisions of Section 17.1 thereof, the Southwest Airlines
Co. 401(k) Plan (the "Plan") is hereby amended in the following respects only,
effective as of the dates set forth herein:

         (1) Item 8.1 of the Table of Contents is hereby amended, effective
January 1, 2002, to read as follows:

                  "8.1     DEATH OF MEMBER..."

         (2) Article II, Paragraph (dd) of Section 2.1, is hereby amended in its
entirety, effective January 1, 2002:

                  "(dd) Retirement: Separation from service after a Member has
         reached his Normal Retirement Date. Retirement shall be considered as
         commencing on the day immediately following a Member's last day of
         service."

         (3) Article IV, Section 4.4, is hereby amended in its entirety,
effective September 1, 2002, to read as follows:

                  "4.4 Distribution of Excess Deferrals: If a Member's Salary
         Reduction Contributions hereunder should exceed the applicable dollar
         amount as set forth in Section 402(g) of the Code ($11,000 for the
         Member's taxable year beginning 2002), adjusted for taxable years of
         the Member beginning after December 31, 2006 for increases in the cost
         of living, as set forth in Section 402(g)(4) of the Code, the excess
         (with earnings thereon) shall be reduced as follows:

                           (a) To the extent that such excess Salary Reduction
                  Contributions do not exceed the applicable dollar limitation
                  under Section 414(v), reduced by elective deferrals previously
                  treated as Catch-Up Contributions, whether under this Plan or
                  another applicable employer plan (as defined in Section
                  414(v)(6)(A) of the Code), the amount of such excess Salary
                  Reduction Contributions shall be recharacterized as Catch-Up
                  Contributions, if such Member is otherwise eligible to make
                  Catch-Up Contributions in accordance with Section 21.3 hereof
                  during the Plan Year in which the excess deferral arises.

                           (b) If the Member is not eligible to make Catch-Up
                  Contributions, as provided in Section 21.3 hereof, or to the
                  extent that recharacterization of such excess Salary Reduction
                  Contributions, together with elective deferrals previously
                  treated as Catch-Up Contributions, whether under this Plan or
                  another applicable


                                      -1-
<PAGE>


                  employer plan (as defined in Section 414(v)(6)(A) of the
                  Code), exceeds the applicable dollar limitation under Section
                  414(v), the amount of such excess Salary Reduction
                  Contributions shall be distributed to the Member. Any
                  distribution under this Section shall be made to the Member no
                  later than the April 15th immediately following the close of
                  the Member's taxable year with respect to which such excess
                  deferrals were made.

         If the Member also participates in another elective deferral program
         (within the meaning of Section 402(g)(3) of the Code) and if, when
         aggregating his elective deferrals under all such programs, an excess
         of deferral contributions arises under the dollar limitation in Code
         Section 402(g) with respect to such Member, the Member shall, no later
         than March 1st following the close of the Member's taxable year, notify
         the Committee as to the portion of such excess deferrals to be
         allocated to this Plan and such excess so allocated to this Plan (with
         earnings thereon) shall be deemed a Catch-Up Contribution in accordance
         with subparagraph (a) herein, as the case may be, or distributed to the
         Member in accordance with subparagraph (b) herein. In the event there
         is a loss allocable to an excess deferral, any distribution to a Member
         as required by this Section shall be no greater than the lesser of: (i)
         the value of the Member's Salary Reduction Contribution Account or (ii)
         the Member's excess deferrals for the Plan Year."

         (4) Article IV, Section 4.5, is hereby amended in its entirety,
effective January 1, 2002, to read as follows:

                  "(a) Determination of Deferral Percentages: As soon as
         administratively feasible after the end of each Plan Year (or other
         applicable period) the Committee shall determine:

                           (i) Deferral Percentage. The "deferral percentage"
                  for each Employee who is then eligible for Salary Reduction
                  Contributions, which in the case of a Highly Compensated
                  Employee, shall be the ratio of the amount of such Highly
                  Compensated Employee's Salary Reduction Contributions for such
                  Plan Year (less excess Salary Reduction Contributions treated
                  as Catch-Up Contributions for the Plan Year in accordance with
                  Section 4.4 above) to the Highly Compensated Employee's
                  compensation (as defined in Section 2.1(r) hereof) for such
                  Plan Year and, which in the case of an Employee who is not a
                  Highly Compensated Employee, shall be the ratio of the amount
                  of such Employee's Salary Reduction Contributions for the
                  prior Plan Year (less excess Salary Reduction Contributions
                  treated as Catch-Up Contributions for the Plan Year in
                  accordance with Section 4.4 above) to such Employee's
                  compensation (as defined in Section 2.1(r) hereof) for the
                  prior Plan Year.

                           (ii) Highly Compensated Deferral Percentage. The
                  "highly compensated deferral percentage," which shall be the
                  average of the "deferral percentages" for all Highly
                  Compensated Employees then eligible for Salary Reduction
                  Contributions; and

                           (iii) Nonhighly Compensated Deferral Percentage. The
                  "nonhighly compensated deferral percentage," which shall be
                  the average of the "deferral percentages" for all Employees
                  then eligible for Salary Reduction Contributions


                                      -2-
<PAGE>


                  who were not included in the "highly compensated deferral
                  percentage," in (ii) above."

         If a Highly Compensated Employee participates in two (2) or more plans
         maintained by an Employer or any Affiliate that are subject to the
         deferral percentage test, then such Employee's deferral percentage
         shall be determined by aggregating his participation in all such plans.
         In addition, if an Employer maintains two (2) or more plans subject to
         the deferral percentage test and such plans are treated as a single
         plan for purposes of the requirements for qualified plans under either
         Code Section 410(b) or 401(a)(4), then such plans are treated as a
         single plan for purposes of the deferral percentage test. For purposes
         of implementing the deferral percentage test, elective deferrals
         treated as Catch-Up Contributions shall be disregarded.

                  (b) Limitation on Highly Compensated Deferral Percentage. In
         no event shall the "highly compensated deferral percentage" exceed the
         greater of: (1) a deferral percentage equal to one and one-fourth (1
         1/4) times the "nonhighly compensated deferral percentage" or (2) a
         deferral percentage equal to two (2) times the "nonhighly compensated
         deferral percentage," but not more than two (2) percentage points
         greater than the "nonhighly compensated deferral percentage."

                  (c) Recharacterization of Excess Salary Reduction
         Contributions. If the above deferral percentage test would otherwise be
         violated as of the end of the Plan Year, then, to the extent that the
         excess Salary Reduction Contributions of such Highly Compensated
         Employees do not exceed the applicable dollar limitation under Section
         414(v), reduced by elective deferrals previously treated as Catch-Up
         Contributions, whether under this Plan or another elective deferral
         program (as defined under Section 402(g)(3)), the amount of the excess
         Salary Reduction Contributions of such Highly Compensated Employees
         shall be recharacterized as Catch-Up Contributions, if such Member is
         otherwise eligible to make Catch-Up Contributions in accordance with
         Section 21.3 hereof during the Plan Year in which the excess deferral
         arises.

                  (d) Application of Qualified Nonelective Contributions. If,
         after recharacterization of the excess Salary Reduction Contributions
         of such Highly Compensated Employees, the deferral percentage test
         would still be violated as of the end of the Plan Year, then, subject
         to satisfaction of the conditions described in Section 1.401(k)-1(b)(5)
         of the Treasury Regulations, the "deferral percentage," as defined in
         (a)(i) above, shall instead be the ratio of the sum of the Employee's
         Salary Reduction Contributions (less excess Salary Reduction
         Contributions treated as Catch-Up Contributions for the Plan Year),
         Qualified Nonelective Contributions, if any, and, to the extent
         necessary to satisfy the deferral percentage test, Company Matching
         Contributions for such Plan Year to the Employee's compensation (as
         defined in Section 2.1(r) hereof) for such Plan Year. Any Company
         Matching Contributions so utilized to satisfy the deferral percentage
         test shall at all times be one hundred percent (100%) vested and
         nonforfeitable and shall be excluded from consideration for purposes of
         the contribution percentage test described in Section 4.6.

                  (e) Distribution of Excess Contributions. If, after
         consideration of Qualified Nonelective Contributions, if any, and
         applicable Company Matching Contributions, as


                                      -3-
<PAGE>


         described above, the deferral percentage test would still be violated
         as of the end of the Plan Year, then notwithstanding any other
         provision hereof, every Salary Reduction Contribution (other than
         excess Salary Reduction Contributions treated as Catch-Up Contributions
         for the Plan Year) included in the "highly compensated deferral
         percentage" for a Member whose deferral percentage is greater than the
         permitted maximum shall be revoked to the extent necessary to comply
         with such deferral percentage test and the amount of such Salary
         Reduction Contribution (other than excess Salary Reduction
         Contributions treated as Catch-Up Contributions for the Plan Year), to
         the extent revoked, shall constitute an "excess contribution" to be
         distributed (with earnings thereon) no later than the last day of the
         Plan Year following the Plan Year with respect to which such
         contribution was made. Excess contributions are allocated to the Highly
         Compensated Employees with the largest amounts of Employer
         contributions taken into account in calculating the deferral percentage
         test for the Plan Year in which the excess arose, beginning with the
         Highly Compensated Employee with the largest amount of such Employer
         contributions and continuing in descending order until all excess
         contributions have been allocated. For purposes of the preceding
         sentence, the "largest" amount is determined after distribution of any
         amounts distributed hereunder pursuant to Section 4.4 hereof. In the
         event there is a loss allocable to an excess contribution, any
         distribution to a Member as required by this Section shall be no
         greater than the lesser of: (a) the value of the Member's Salary
         Reduction Contribution Account or (b) the Member's excess contribution
         for the Plan Year. If an excess contribution is distributed to a Member
         in accordance with the foregoing, any Company Matching Contribution
         relating to such excess contribution shall be forfeited and then
         utilized as described in Section 6.3 hereof, and shall not be taken
         into account in determining the Member's contribution percentage under
         Section 4.6."

         (5) Article IV, Paragraph (a) of Section 4.7, is hereby amended in its
entirety, effective January 1, 2002, to read as follows:

                  "The transfer occurs on or before the 60th day following his
         receipt of such distribution, or such later date as permitted by the
         Internal Revenue Service for distributions on and after January 1,
         2002; or if such distribution has previously been deposited in an
         individual retirement account (as defined in Section 408 of the Code),
         such distribution has been so deposited no earlier than July 1, 1987,
         and the transfer occurs on or before the 60th day following his receipt
         of such distribution from the individual retirement account, or such
         later date as permitted by the Internal Revenue Service for
         distributions on and after January 1, 2002;"

         (6) Article VI, the second sentence of Section 5.1, is hereby amended
in its entirety, effective September 1, 2002, to read as follows:

                  "The Individual Account of each Member shall be composed of a
         Company Matching Contribution Account, to which Company Matching
         Contributions, if any, shall be credited; a Salary Reduction
         Contribution Account, to which Salary Reduction Contributions, if any,
         and Catch-Up Contributions, if any, together with Qualified Nonelective
         Contributions and Company Matching Contributions, if any, utilized to
         satisfy the deferral percentage test or the contribution percentage
         test, as set forth in


                                      -4-
<PAGE>


         Sections 4.5 and 4.6 hereof, if any, shall be credited; and, if
         applicable, a Rollover Contribution Account."

         (7) Article V, the first paragraph of Section 5.3, is hereby amended in
its entirety, effective September 1, 2002, to read as follows:

                  "Each Member who desires to make Salary Reduction
         Contributions shall indicate such intent by making an election to be
         effective as of the Entry Date on which such Member first satisfies the
         eligibility requirements of Article III hereof, or as of any subsequent
         Entry Date. Such election must be made prior to such Entry Date, and
         shall be effective for each payroll period thereafter until modified or
         amended. Each Member who is eligible to make Catch-Up Contributions
         under Section 21.3 hereof and who desires to make such contributions
         for the Plan Year shall indicate such intent by making an election in
         the manner prescribed by the Committee; provided, however, that a
         separate election to make Catch-Up Contributions shall remain effective
         no later than the end of the Member's taxable year for which such
         separate Catch-Up Contribution election is effective."

         (8) Article V, Section 5.3(c), is hereby amended in its entirety,
effective September 1, 2002, to read as follows:

                  "The Company may unilaterally amend or revoke a salary
         deferral election with any Member at any time, including an amendment
         to recharacterize an election of Salary Reduction Contributions as an
         election of Catch-Up Contributions, if the Company determines that such
         revocation or amendment is necessary to ensure that a Member's Annual
         Additions, as defined in subsection 6.5(b) hereof, for any Plan Year
         will not exceed the limitations of Article VI or to ensure that the
         requirements of Section 401(k) of the Code and Sections 4.1 and 21.3
         hereof have been satisfied with respect to the amount that may be
         withheld and contributed on behalf of a Member."

         (9) Article VII, Section 7.1, is hereby amended in its entirety,
effective January 1, 2002, to read as follows:

                  "7.1 Normal or Late Retirement: A Member, upon reaching his
         Normal Retirement Date for the purposes of this Plan, shall be one
         hundred percent (100%) vested in his Individual Account, and such
         amount contained therein shall be nonforfeitable. If a Member continues
         in the service of the Company beyond his Normal Retirement Date, he
         shall continue to participate in the Plan."

         (10) Article VIII, Section 8.1, is hereby amended in its entirety,
effective January 1, 2002, to read as follows:

                  "8.1 Death of Member: Upon the death of a Member while
         employed by the Company, such Member's Individual Account shall
         thereupon become one hundred percent (100%) vested, and the amount
         contained therein shall be nonforfeitable."


                                      -5-
<PAGE>


         (11) Article IX, Section 9.1, is hereby amended, effective January 1,
2002, to read as follows:

                  "9.1 Disability: If a Member's employment with the Company
         terminates as a result of his Disability, such Member's Individual
         Account shall thereupon become one hundred percent (100%) vested, and
         the amount contained therein shall be nonforfeitable."

         (12) Article X, Section 10.3, is hereby amended, effective January 1,
2002, to read as follows:

                  "10.3 Forfeitures: A Member to whom Section 10.1 is applicable
         shall forfeit that portion of the amount in his Individual Account to
         which he is not entitled under Section 10.1, and the amount thus
         forfeited shall be used to reduce Company Matching Contributions
         pursuant to the provisions of Section 6.3. A Member who does not have
         any nonforfeitable right to his Individual Account shall be deemed to
         have received a cashout distribution pursuant to Section 15.3 hereof,
         and shall forfeit the amount in such Individual Account in the Plan
         Year in which his separation from service occurs. A Member who receives
         a cashout distribution in accordance with the provisions of Section
         15.3 hereunder shall forfeit that portion of his Individual Account to
         which he is not entitled under Section 10.1 in the Plan Year in which
         the cashout distribution occurs. A Member who is entitled to a portion
         of his Individual Account but who is not one hundred percent (100%)
         vested in such Individual Account and who does not receive a cashout
         distribution under Section 15.3, shall forfeit that portion of his
         Individual Account to which he is not entitled under Section 10.1 in
         the Plan Year in which he incurs five (5) consecutive Breaks in
         Service."

         (13) Article XI, the last sentence of the third paragraph of Section
11.2, is hereby deleted in its entirety, effective January 1, 2002.

         (14) Article XV, Section 15.1, is hereby amended in its entirety,
effective January 1, 2002, to read as follows:

                  "15.1. Method of Payment: As soon as practicable after the
         separation from service of a Member, former Member, or Beneficiary who
         is entitled to receive benefits hereunder, as provided in Articles VII,
         VIII, IX or X and this Article XV, the Committee shall give written
         notice to the Trustee. Such benefits shall be paid to the Member,
         former Member, or his Beneficiary in a lump sum.
         Any benefit payable hereunder will be paid in cash."

         (15) Article XV, Section 15.2, is hereby amended in its entirety,
effective January 1, 2002, except as otherwise specified herein, to read as
follows:

                  "15.2. Time of Payment: Distribution shall be made as soon as
         administratively practicable, but in no event later than one (1) year
         after the Valuation Date coincident with or immediately following the
         separation from service of a Member, former Member, or Beneficiary who
         is entitled to receive a benefit hereunder. Notwithstanding the


                                      -6-
<PAGE>


         foregoing, if the nonforfeitable portion of a Member's or former
         Member's Individual Account exceeds Five Thousand and No/100 Dollars
         ($5,000.00), no distributions, other than distributions upon the death
         of such Member or former Member, may commence without the consent of
         the Member or former Member until he attains age sixty-two (62), at
         which time distribution shall be made. Such consent must be obtained
         within the ninety (90) day period ending on the date of distribution.
         The Committee shall notify the Member or former Member of the right to
         defer any distribution until the date on which he attains age sixty-two
         (62). Such notification shall include a general description of the
         material features, and an explanation of the relative values of, the
         optional forms of benefit available under the Plan in a manner that
         would satisfy the notice requirements of Section 417(a)(3) of the Code,
         and shall be provided no less than thirty (30) days and no more than
         ninety (90) days prior to the date of distribution. Notwithstanding the
         foregoing, the consent of the Member or former Member shall not be
         required to the extent that a distribution is required to satisfy
         Section 415 or Sections 401(k)(8) or 401(m)(6) of the Code. In
         addition, upon termination of this Plan, if the Plan does not then
         offer an annuity option, the Member's or former Member's Individual
         Account may, without his consent, be distributed to the Member or
         former Member or transferred to another defined contribution plan
         maintained by an Affiliate. Furthermore, if a distribution is one to
         which Sections 401(a)(11) and 417 of the Code do not apply, such
         distribution may commence less than thirty (30) days after the notice
         required under Section 1.411(a)-11(c) of the Treasury Regulations is
         given, provided that: (i) the Committee clearly informs the Member or
         former Member that he has a right to a period of at least thirty (30)
         days after receiving the notice to consider the decision of whether or
         not to elect a distribution (and, if applicable, a particular
         distribution option), and (ii) the Member or former Member, after
         receiving the notice, affirmatively elects a distribution.

                  Distribution shall be made no later than the required
         beginning date, which is April 1st of the calendar year following the
         later of: (a) the calendar year in which a Member attains age 70 1/2 or
         (b) the calendar year in which the Member retires; provided that if a
         Member is a Five Percent (5%) Owner (as defined in Section 19.1(f)
         hereof), then the required beginning date is April 1st of the calendar
         year following the calendar year in which such Member attains age 70
         1/2. Effective as of November 16, 2001, distribution of a Member's
         entire Individual Account shall be made in a single lump sum on or
         before such Member's required beginning date. In the case of a Member
         who attained age 70 1/2 prior to November 16, 2001, or in the case of a
         Member who is a five percent (5%) owner, the minimum distribution
         required for the calendar year immediately preceding the Member's
         required beginning date must be made on or before his required
         beginning date. The minimum distribution for other calendar years,
         including the minimum distribution for the calendar year in which the
         Member's required beginning date occurs, must be made on or before
         December 31 of such calendar year. All minimum distributions required
         under this Article XV shall be determined and made in accordance with
         the applicable Treasury Regulations under Section 401(a)(9) of the
         Code, and the requirements of this Article will take precedence over
         any inconsistent provisions of the Plan. Required minimum distributions
         will be determined beginning with the first distribution calendar year
         and up to and including the distribution calendar year that includes
         the Member's date of death. Effective January 1, 2003, during such


                                      -7-
<PAGE>


         Member's lifetime, the minimum amount that will be distributed for each
         distribution calendar year is the lesser of:

                           (a) the quotient obtained by dividing the Member's
                  Individual Account balance by the distribution period in the
                  Uniform Lifetime Table set forth in section 1.401(a)(9)-9 of
                  the Treasury Regulations, using the Member's age as of the
                  Member's birthday in the distribution calendar year; or

                           (b) if the Member's sole designated beneficiary for
                  the distribution calendar year is the Member's spouse, the
                  quotient obtained by dividing the Member's Individual Account
                  balance by the number in the Joint and Last Survivor Table set
                  forth in section 1.401(a)(9)-9 of the Treasury Regulations,
                  using the Member's and spouse's attained ages as of the
                  Member's and spouse's birthdays in the distribution calendar
                  year.

                  Notwithstanding any provision herein to the contrary, any
         Member who attains age 70 1/2 in a calendar year after 1995 and prior
         to November 16, 2001, may irrevocably elect, in the manner established
         by the Committee, by April 1 of the calendar year following the year in
         which the Member attains age 70 1/2 (or by December 31, 1997 in the
         case of a Member who attains age 70 1/2 in 1996) to defer distributions
         until April 1 of the calendar year following the calendar year in which
         the Member retires. If no such election is made, the Member will begin
         receiving distributions by the April 1 of the calendar year following
         the year in which the Member attains age 70 1/2 (or by December 31,
         1997 in the case of a Member who attains age 70 1/2 in 1996), and any
         such distributions shall comply with the provisions of the preceding
         paragraph. Furthermore, any Member who attains age 70 1/2 in a calendar
         year prior to 1996, may irrevocably elect, in the manner established by
         the Committee, to stop distributions and recommence distributions as of
         the April 1 of the calendar year following the calendar year in which
         such Member retires.

                  If distributions have commenced so that payments are being
         made over the life of the Member, and he dies before his entire
         interest has been distributed, then the remaining portion of such
         interest shall be distributed at least as rapidly as under the method
         of distribution being used as of the date of his death, but in no event
         later than one year after the Valuation Date coincident with or
         immediately following his death. On the other hand, if a Member dies
         before the distribution of any of his benefits has begun, then his
         entire interest will be distributed no later than one year after the
         Valuation Date coincident with or immediately following his death. If
         the designated Beneficiary is the Member's surviving spouse and such
         surviving spouse dies after the Member, but before payment to such
         surviving spouse is made, then the provisions of the preceding sentence
         shall be applied as if the surviving spouse were the Member.
         Furthermore, if the designated Beneficiary is the surviving spouse of
         the Member, then distribution to such surviving spouse will not be
         required earlier than the later of: (a) December 31 of the calendar
         year immediately following the calendar year of the Member's death and
         (b) December 31 of the calendar year in which the Member would have
         attained age 70 1/2. Distribution of benefits is considered to have
         begun, for purposes of this paragraph, on the required beginning date;
         provided that if a Member's designated Beneficiary is his


                                      -8-
<PAGE>


         surviving spouse, and such surviving spouse dies after the Member but
         before payments to such surviving spouse have begun, then distribution
         of benefits is considered to have begun on the date distribution to the
         surviving spouse is required to begin pursuant to the provisions of
         this paragraph.

                  Notwithstanding any provision herein to the contrary, unless a
         Member or former Member elects otherwise, in writing, no distribution
         hereunder shall start later than 60 days after the close of the Plan
         Year in which the last to occur of the following occurs:

                  (a) the Member or former Member attains Normal Retirement Age,

                  (b) the 10th anniversary of the year in which the Member or
         former Member commenced participation in the Plan, or

                  (c) the Member or former Member terminates service with the
         Company."

         (16) Article XV, Section 15.3, is hereby amended, effective January 1,
2002, to read as follows:

                  "15.3. Cash Out Distribution: If a Member or former Member who
         has received a distribution of his benefits hereunder on or before the
         last day of the second Plan Year following the year in which his
         separation from service occurs, has forfeited a portion of his
         Individual Account, then in the event such Member or former Member is
         subsequently rehired by the Company prior to the date on which he
         incurs five (5) consecutive Breaks in Service, he shall be entitled to
         repay, at any time prior to the earlier of: (i) the date which is five
         (5) years after the first date on which he is subsequently reemployed
         by the Company and (ii) the date on which he incurs five (5)
         consecutive Breaks in Service, the amount of the distribution to him
         from his Individual Account. Upon such repayment, the rehired Member's
         or former Member's Individual Account shall be credited with the exact
         amount that was nonvested at the time of termination. In the event a
         rehired Member or former Member who has received a distribution
         hereunder does not timely repay such distribution from his Individual
         Account, as provided above, then the amount he forfeited at the time of
         his distribution pursuant to the terms of Section 10.3 hereof shall
         remain forfeited. His prior years of Vesting Service shall be taken
         into account, however, for purposes of determining his vested interest
         in contributions following reemployment. If a Member or former Member
         who does not have any nonforfeitable right to his Individual Account
         and thus is deemed to have received a cashout distribution, pursuant to
         the provisions of Section 10.3 hereof, is subsequently reemployed by
         the Company and five (5) consecutive Breaks in Service have not
         occurred, then upon such reemployment, the rehired Member's or former
         Member's Individual Account shall be credited with the exact amount
         that was nonvested at the time of separation from service."

         (17) Article XXI is hereby amended to add Section 21.4, effective
January 1, 2002, to read as follows:

                  "21.4 Increase in Annual Compensation Limit: The Annual
         Compensation of each Member taken into account in determining
         allocations shall not exceed $200,000, as adjusted for cost-of-living
         increases in accordance with section 401(a)(17)(B) of the Code. Annual
         Compensation means compensation during the Plan Year. The
         cost-of-


                                      -9-
<PAGE>


         living adjustment in effect for a calendar year applies to Annual
         Compensation for the Plan Year that begins with or within such calendar
         year."

         (18) Article XXI is hereby amended to add Section 21.5, effective
January 1, 2002, to read as follows:

                  "21.5 Modification of Top-Heavy Rules:

                           a. Determination of top-heavy status.

                                    (i) Key Employee. Key Employee means any
                           Employee or former Employee (including any deceased
                           Employee) who, at any time during the Plan Year that
                           includes the Determination Date, was an officer of
                           the Company having Annual Compensation greater than
                           $130,000 (as adjusted under section 416(i)(1) of the
                           Code for Plan Years beginning on or after January 1,
                           2003), a 5-percent owner of the Company, or a
                           1-percent owner of the Company having Annual
                           Compensation of more than $150,000. For this purpose,
                           Annual Compensation means compensation within the
                           meaning of Section 2.1(c) of the Plan. The
                           determination of who is a Key Employee will be made
                           in accordance with section 416(i)(1) of the Code and
                           the applicable regulations and other guidance of
                           general applicability issued thereunder.

                                    (ii) Determination of present values and
                           amounts. This subsection (ii) shall apply for
                           purposes of determining the present values of accrued
                           benefits and the amounts of Individual Account
                           balances of Employees as of the Determination Date.

                                            (1) Distributions during year ending
                                    on the Determination Date. The present
                                    values of accrued benefits and the amounts
                                    of Individual Account balances of an
                                    Employee as of the Determination Date shall
                                    be increased by the distributions made with
                                    respect to the Employee under the Plan and
                                    any plan aggregated with the Plan under
                                    section 416(g)(2) of the Code during the
                                    1-year period ending on the Determination
                                    Date. The preceding sentence shall also
                                    apply to distributions under a terminated
                                    plan which, had it not been terminated,
                                    would have been aggregated with the Plan
                                    under section 416(g)(2)(A)(i) of the Code.
                                    In the case of a distribution made for a
                                    reason other than separation from service,
                                    death, or disability, this provision shall
                                    be applied by substituting "5-year period"
                                    for "1-year period."

                                            (2) Employees not performing
                                    services during year ending on the
                                    Determination Date. The accrued benefits and
                                    Individual Accounts of any individual who
                                    has not performed services for the Employer
                                    during the 1-year period ending on the
                                    Determination Date shall not be taken into
                                    account.

                           (b) Minimum benefits. Company Matching Contributions
                  shall be taken into account for purposes of satisfying the
                  minimum contribution requirements of section 416(c)(2) of the
                  Code and the Plan and any Company


                                      -10-
<PAGE>


                  Matching Contributions that are used to satisfy the minimum
                  contribution requirements shall be treated as matching
                  contributions for purposes of the actual contribution
                  percentage test and other requirements of section 401(m) of
                  the Code."

         (19) Article XXI is hereby amended to add Section 21.6, effective
January 1, 2002, to read as follows:

                  "21.6 Direct Rollovers of Plan Distributions: For purposes of
         the direct rollover provisions in Section 15.6 of the Plan, for plan
         distributions on or after January 1, 2002, the term "eligible
         retirement plan" shall mean (i) an individual retirement account
         described in Section 408(a) of the Code, (ii) an individual retirement
         annuity described in Section 408(b) of the Code (other than an
         endowment contract), (iii) a qualified trust described under Section
         401(a) of the Code, (iv) an annuity plan described in Section 403(a) of
         the Code, (v) an annuity contract described in section 403(b) of the
         Code, and (vi) an eligible plan under section 457(b) of the Code which
         is maintained by a state, political subdivision of a state, or any
         agency or instrumentality of a state or political subdivision of a
         state and which agrees to separately account for amounts transferred
         into such plan from this Plan. The definition of eligible retirement
         plan shall also apply in the case of a distribution to a surviving
         spouse, or to a spouse or former spouse who is the alternate payee
         under a qualified domestic relation order, as defined in section 414(p)
         of the Code. Furthermore, the term "eligible rollover distribution"
         shall not include any hardship withdrawal."

         (20) Article XXI is hereby amended to add Section 21.7, effective
January 1, 2002, to read as follows:

                  "21.7 Rollovers from Other Plans:

                           a. Direct Rollovers: For purposes of the rollover
                  contribution provisions of Section 4.7 of the Plan, a Member
                  who is entitled to receive an eligible rollover distribution
                  from (i) a qualified plan described in section 401(a) or
                  403(a) of the Code, (ii) an annuity contract described in
                  section 403(b) of the Code, or (iii) an eligible plan under
                  section 457(b) of the Code that is maintained by a state,
                  political subdivision of a state, or any agency or
                  instrumentality of a state or political subdivision of a
                  state, may, in accordance with procedures approved by the
                  Committee, elect to transfer directly to the Trustee, as a
                  trustee-to-trustee transfer, in cash only, an amount equal to
                  all or a portion of such distribution; provided, however, that
                  the maximum amount of such transfer shall be the fair market
                  value of that portion of the distribution that would be
                  includable in gross income if not so transferred (determined
                  without regard to Section 402(c) of the Code).

                           b. Member Rollover Contributions from Other Plans:
                  For purposes of the rollover contribution provisions of
                  Section 4.7 of the Plan, any Member who has distributed to him
                  an amount that qualifies as an eligible rollover distribution
                  from (i) a qualified plan described in section 401(a) or
                  403(a) of the Code, (ii) an annuity contract described in
                  section 403(b) of the Code, (iii) an eligible plan under
                  section 457(b) of the Code that is maintained by a state,
                  political subdivision of a state, or any agency or
                  instrumentality of a state or political


                                      -11-
<PAGE>


                  subdivision of a state, or (iv) any portion of a distribution
                  from an individual retirement account annuity described in
                  section 408(a) or 408(b) of the Code, may, in accordance with
                  procedures approved by the Committee, contribute, in cash
                  only, an amount equal to all or any portion of such
                  distribution that is eligible to be rolled over and that would
                  otherwise be includible in gross income if not so transferred
                  (determined without regard to Section 402(c) of the Code)."

         (21) Article XXI is hereby amended to add Section 21.8, effective
January 1, 2002, to read as follows:

                  "21.8 Repeal of Multiple-Use Test: The multiple use test
         described in Treasury Regulation section 1.401(m)-2 and Section 4.6 of
         the Plan shall not apply for Plan Years beginning on or after January
         1, 2002. Any references made throughout the Plan to the multiple use
         test shall hereafter be disregarded."


         IN WITNESS WHEREOF, and as conclusive evidence of the adoption of the
foregoing instrument comprising Amendment No. 2 to the Southwest Airlines Co.
401(k) Plan, the Company has caused its corporate seal to be affixed hereto and
these presents to be duly executed in its name and behalf by its proper officers
thereunto duly authorized this 21 day of November, 2002.

                                    SOUTHWEST AIRLINES CO.


                                    By: /s/ JAMES F. PARKER
                                       -----------------------------------------
                                       James F. Parker, Chief Executive Officer
ATTEST:

/s/ DEBORAH ACKERMAN
---------------------------------
Deborah Ackerman, Assistant Secretary


                                      -12-
<PAGE>


STATE OF TEXAS       )
                     )
COUNTY OF DALLAS     )

         BEFORE ME, the undersigned, a Notary Public in and for said County and
State, on this 21 day of November, 2002, personally appeared JAMES F. PARKER, to
me known to be the identical person who subscribed the name of SOUTHWEST
AIRLINES CO., as its CHIEF EXECUTIVE OFFICER to the foregoing instrument and
acknowledged to me that he executed the same as his free and voluntary act and
deed and as the free and voluntary act and deed of such organization for the
uses and purposes therein set forth.

         GIVEN UNDER MY HAND AND SEAL OF OFFICE, the day and year last above
written


                                     /s/ MARILYN STRICKLAND
                                    --------------------------------------------
                                    Notary Public in and for the State of Texas


My Commission Expires: 05/31/05
                       -----------


                                      -13-