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                                                                   EXHIBIT 10.17

                               EMPLOYMENT CONTRACT

         THIS EMPLOYMENT CONTRACT (hereinafter referred to as this "Agreement"),
dated as of June 19, 2001, by and between COLLEEN C. BARRETT (hereinafter
referred to as the "Employee"), a resident of Dallas, Texas, and SOUTHWEST
AIRLINES CO. (hereinafter referred to as "Southwest", which term shall include
its subsidiary companies where the context so admits), a Texas corporation,

                                   WITNESSETH:

         WHEREAS the Employee has served Southwest since March 1978 in various
executive capacities, most recently as Executive Vice President-Customers and
Corporate Secretary; and

         WHEREAS the Employee and Southwest desire to enter into an agreement
for the continuing full-time services of the Employee;

         NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants and promises contained herein, Southwest and the Employee agree as
follows:

                        I. POSITION, DUTIES AND AUTHORITY

A.       POSITIONS, DUTIES AND RESPONSIBILITIES. The Employee shall serve as
         President and Chief Operating Officer of Southwest, and, for so long as
         she shall be elected to the Board of Directors of Southwest, she shall
         serve as a member of the Board without additional compensation
         hereunder. Further, she shall continue to serve as Corporate Secretary
         of Southwest, without additional compensation hereunder, until such
         time as the Board of Directors elects otherwise. The Employee's duties
         and responsibilities as President and Chief Operating Officer shall
         include managing the day to day operations of Southwest; planning the
         future course of such operations; achieving excellent Customer and
         employee service quality; preserving the Southwest servant leader
         culture; assisting the Chief



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         Executive Officer in implementing Southwest's current and long range
         business policies and programs; and, in general, maintaining employee
         morale and esprit de corps. In addition, she shall perform such other
         corporate duties and discharge such other corporate responsibilities as
         are specified in the bylaws of Southwest or are designated from time to
         time by any of the Chairman of the Board of Directors of Southwest, the
         Chief Executive Officer or the full Board of Directors.

B.       AUTHORITY. The Employee shall be vested with all authority reasonably
         necessary to carry out her duties and responsibilities as set forth in
         this Article I.

C.       NECESSARY SUPPORT AND ENVIRONMENT. The Employee shall be provided with
         the secretarial and other support personnel (including a full-time
         administrative assistant) and general working environment (including a
         private, furnished office) reasonably necessary for her to carry out
         her duties and responsibilities as set forth in this Article I.

                           II. EMPLOYEE'S OBLIGATIONS

A.       TIME AND EFFORT. During the term of her employment hereunder, the
         Employee shall devote such time and effort as is required to perform
         her duties and to discharge her responsibilities hereunder. The
         Employee shall generally conform with all policies of Southwest as they
         apply to a person of her level of duties and responsibilities.

B.       NON-COMPETITION. The Employee recognizes and understands that in
         performing the duties and responsibilities of her employment as
         outlined in this Agreement and pursuant to her employment at Southwest
         prior to the execution of this Agreement, the Employee has occupied and
         will occupy a position of trust and confidence, pursuant to which the
         Employee has developed and acquired and will develop and acquire
         experience and knowledge with respect to various aspects of the
         business of Southwest and the manner in which such



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         business is conducted. It is the expressed intent and agreement of the
         Employee and Southwest that such knowledge and experience shall be used
         in the furtherance of the business interests of Southwest and not in
         any manner which would be detrimental to such business interests of
         Southwest. The Employee therefore agrees that, so long as the Employee
         is employed pursuant to this Agreement, unless she first secures the
         consent of the Board of Directors of Southwest, the Employee will not
         invest, engage or participate in any manner whatsoever, either
         personally or in any status or capacity (other than as a shareholder of
         less than one percent [1%] of the capital stock of a publicly owned
         corporation), in any business or other entity organized for profit
         engaged in significant competition with Southwest in the conduct of its
         air carrier operations anywhere in the States of Texas, Louisiana,
         Oklahoma, New Mexico, Missouri, Arizona, Nevada, California, Arkansas,
         Alabama, Tennessee, Kentucky, Michigan, Indiana, Ohio, Maryland,
         Illinois, Utah, Washington, Oregon, Nebraska, Florida, Idaho,
         Mississippi, New Hampshire, New York, Rhode Island, Connecticut, North
         Carolina and Virginia. Although the Employee and Southwest regard such
         restrictions as reasonable for the purpose of preserving Southwest and
         its proprietary rights, in the event that the provisions of this
         Paragraph II-B should ever be deemed to exceed the time or geographic
         limitations permitted by applicable laws, then such provisions shall be
         reformed to the maximum time or geographic limitations permitted by
         applicable laws.

                                    III. TERM

A.       TERM. This Agreement and the Employee's employment hereunder shall
         commence and become effective on and as of June 19, 2001. The term of
         such employment shall expire on



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         June 19, 2004, unless extended by consent of the parties hereto or
         earlier terminated pursuant to the provisions of Article V.

                           IV. EMPLOYEE'S COMPENSATION

A.       BASE SALARY. The Employee's annual Base Salary for the year ending June
         19, 2002 which originally was to be the amount of $309,000 shall, in
         accordance with Employee's irrevocable agreement to terminate payment
         of Employee's salary for the period October 1, 2001 through December
         31, 2001, be $231,750, payable in 18 equal semi-monthly installments of
         $12,875 commencing with Southwest's second regular payroll date in
         June, 2001 and continuing through Southwest's first regular payroll
         date in October, 2001, at which point such semi-monthly installments
         shall temporarily cease (it being understood and agreed that no Base
         Salary shall be due or payable to Employee with respect to the period
         commencing October 1, 2001 and continuing through and including
         December 31, 2001); with such semi-monthly installments of $12,875 to
         recommence with Southwest's first regular payroll date in January, 2002
         and continuing through and including Southwest's second regular payroll
         date in June, 2002. The Employee's annual Base Salary for the years
         ending June 19, 2003 and 2004 shall be $321,360 and $334,215,
         respectively. The Employee's Base Salary for the years ending July 19,
         2003 and July 19, 2004 shall be payable to the Employee in equal
         semi-monthly installments. The Employee's Base Salary installment
         payments shall be subject to such payroll and withholding deductions as
         may be required by law.

B.       PERFORMANCE BONUS. The Board of Directors of Southwest (or the
         Compensation Committee thereof) may grant a Performance Bonus to the
         Employee, in addition to her Base Salary, at such times and in such
         amounts as such Board (or Committee) may determine.



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C.       DEFERRED COMPENSATION. In addition to the Base Salary provided for in
         Paragraph IV-A above, Southwest shall set aside on its books a special
         ledger Deferred Compensation Account (the "Account") for the Employee,
         and shall credit thereto Deferred Compensation determined as
         hereinafter provided. (Southwest at its election may fund the payment
         of Deferred Compensation by setting aside and investing such funds as
         Southwest may from time to time determine. Neither the establishment of
         the Account, the crediting of Deferred Compensation thereto, nor the
         setting aside of any funds shall be deemed to create a trust. Legal and
         equitable title to any funds set aside shall remain in Southwest, and
         the Employee shall have no security or other interest in such funds.
         Any funds so set aside or invested shall remain subject to the claims
         of the creditors of Southwest, present and future.) For each full or
         partial calendar year as the Employee shall remain in the employment of
         Southwest under this Agreement, Deferred Compensation shall accumulate
         in an amount equal to any contributions (including forfeitures but
         excluding any elective deferrals actually returned to the Employee)
         which would otherwise have been made by Southwest on behalf of the
         Employee to the Southwest Airlines Co. Money Purchase Plan but which
         exceed maximum annual additions under such Plan on her behalf under
         federal tax law. If such employment shall terminate prior to December
         31 in any calendar year, then Deferred Compensation shall accumulate
         and be calculated as provided under the terms of Southwest's Money
         Purchase Plan. The Deferred Compensation credited to the Account
         (including the Interest hereinafter provided) shall be paid to the
         Employee (or to the executors or administrators of her estate) at the
         rate of $100,000 per calendar year (subject to such payroll and
         withholding deductions as may be required by law), commencing with the
         calendar year following the year in which (i) the Employee shall become
         sixty-five (65)



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         or (ii) the Employee's employment with Southwest shall terminate
         (whether such termination is under this Agreement or otherwise and
         whether it is before, on or after the expiration of the initial term
         set forth in Paragraph III-A above, and irrespective of the cause
         thereof), whichever shall occur later, and continuing until the entire
         amount of Deferred Compensation and Interest credited to the Account
         shall have been paid. Although the total amount of Deferred
         Compensation ultimately payable to the Employee hereunder shall be
         computed in accordance with the provisions set forth above, there shall
         be accrued and credited to the Account, beginning on January 1, 2002
         and continuing annually thereafter, amounts equal to simple interest at
         the rate of ten percent (10%) per annum, compounded annually
         ("Interest"), on the accrued and unpaid balance of the Deferred
         Compensation credited to the Account as of the preceding December 31.
         The Deferred Compensation and Interest to be paid in any one calendar
         year shall be paid on the first business day of such calendar year.
         Notwithstanding the foregoing, in the event of the Employee's death,
         Southwest, in its sole discretion, shall have the right to pay the
         unpaid balance of the Deferred Compensation (together with any accrued
         Interest thereon) to the executors or administrators of the Employee's
         estate in cash in one lump sum on the first business day of the
         calendar year next following the calendar year in which the Employee
         shall have died. No right, title, interest or benefit under this
         Paragraph IV-C shall ever be liable for or charged with any of the
         torts or obligations of the Employee or any person claiming under her,
         or be subject to seizure by any creditor of the Employee or any person
         claiming under her. Neither the Employee nor any person claiming under
         her shall have the power to anticipate or dispose of any right, title,
         interest or benefit under this Paragraph IV-C in any manner until the
         same shall have been actually distributed by Southwest.



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D.       DISABILITY INSURANCE. Southwest shall provide long term disability
         insurance providing for payment, in the event of disability of the
         Employee, of $10,000 per month to age seventy (70). Except as to
         amounts payable, the terms and conditions of such policy shall be
         identical, or substantially similar, to the disability insurance
         provided by Southwest for its other officers as of the date of this
         Agreement.

E.       MEDICAL AND DENTAL EXPENSES. During the term of this Agreement,
         Southwest shall reimburse the Employee for all medical and dental
         expenses incurred by the Employee and her spouse. Expenses for medical
         and dental care shall be deemed to include all amounts paid with
         respect to hospital bills, doctor and dental bills and drugs for which
         the Employee is not compensated by insurance or otherwise.

F.       STOCK OPTION GRANT. Southwest shall grant to the Employee, effective as
         of the date hereof, ten-year options to purchase 150,000 shares of its
         common stock at $17.11 per share pursuant to Southwest's 1996
         Non-Qualified Stock Option Plan, with one-third of such options to be
         exercisable immediately and one-third to become exercisable on each of
         June 19, 2002 and June 19, 2003.

G.       OTHER BENEFITS. The Employee shall be eligible to continue to
         participate in all employee pension, profit-sharing, stock purchase,
         group insurance and other benefit plans or programs in effect for
         Southwest managerial employees generally to the extent of and in
         accordance with the rules and agreements governing such plans or
         programs, so long as same shall be in effect, with full service credit
         where relevant for the Employee's prior employment by Southwest.
         Southwest shall reimburse the Employee for reasonable expenses incurred
         by her in the performance of her duties and responsibilities hereunder.
         The Employee shall be entitled to vacation of three (3) weeks per year
         or such longer period



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         as may be established from time to time by Southwest for its managerial
         employees generally.

                            V. TERMINATION PROVISIONS

A.       EXPIRATION OR DEATH. The Employee's employment hereunder shall
         terminate on June 19, 2004 (or such later date to which the term of
         this Agreement may be extended by consent of the parties hereto, in
         either case without prejudice to the Employee's privilege to remain an
         employee of Southwest thereafter), or upon the Employee's death,
         whichever shall first occur, without further obligation or liability of
         either party hereunder, except for Southwest's obligation to pay
         Deferred Compensation as provided in Paragraph IV-C of this Agreement.

B.       TERMINATION FOR CAUSE. Southwest may terminate the Employee's
         employment hereunder upon the determination by a majority of its whole
         Board of Directors that the Employee has willfully failed and refused
         to perform her duties and to discharge her responsibilities hereunder.
         Such determination shall be final and conclusive. If the Board of
         Directors of Southwest makes such determination, Southwest may (a)
         terminate the Employee's employment, effective immediately or at a
         subsequent date, or (b) condition her continued employment upon the
         circumstances and place a reasonable limitation upon the time within
         which the Employee shall comply with such considerations or
         requirements. If termination is so effected, Southwest shall have no
         further liability to the Employee hereunder except for the obligation
         to pay Deferred Compensation as provided in Paragraph IV-C hereof.

C.       TERMINATION FOR DISABILITY. Southwest may terminate the Employee's
         employment hereunder on account of any disabling illness, hereby
         defined to include any



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         emotional or mental disorders, physical diseases or injuries as a
         result of which the Employee is, for a continuous period of ninety (90)
         days, unable to perform her duties and to discharge her
         responsibilities hereunder on a full-time basis. Southwest shall give
         to the Employee thirty (30) days' notice of its intention to effect
         such termination pursuant to this Paragraph V-C. If, within such notice
         period, the Employee shall have recovered from her disability
         sufficiently well to resume performance of her duties and discharge of
         her responsibilities on a full-time basis (although still undergoing
         treatment or rehabilitation), Southwest shall not have the right to
         effect such termination. If such disabling illness occurs as a result
         of a job-related cause, Southwest shall continue to pay the Employee
         regular installments of her Base Salary in effect at the time of such
         termination for the remainder of the term of this Agreement. It is
         expressly understood and agreed, however, that any obligation of
         Southwest to continue to pay the Employee her Base Salary pursuant to
         this Paragraph V-C shall be reduced by the amount of any proceeds of
         long-term disability insurance provided for the Employee pursuant to
         Paragraph IV-D above, and shall also be reduced by the amount of the
         proceeds of any worker's compensation or other benefits which the
         Employee receives as a result of or growing out of her disabling
         illness.

D.       CHANGE OF CONTROL TERMINATION. In the event of any change of control of
         Southwest, the Employee may, at her option, terminate her employment
         hereunder by giving to Southwest notice thereof no later than sixty
         (60) days after the Employee shall have determined or ascertained that
         such change has occurred, irrespective whether Southwest shall have
         purported to terminate this Agreement after such event but prior to
         receipt of such notice. If termination is so effected, no later than
         the date of such termination Southwest shall pay the Employee as
         "severance pay" a lump sum equal to (i) $750,000 plus (ii) an



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         amount equal to the unpaid installments of her Base Salary in effect at
         the time of such termination for the remaining term of this Agreement.
         If termination is so effected, Southwest shall have no other further
         liability to the Employee hereunder except for its obligation to pay
         Deferred Compensation as provided in Paragraph IV-C above. For purposes
         of this Paragraph V-D, a "change of control of Southwest" shall be
         deemed to occur if (i) a third person, including a "group" as
         determined in accordance with Section 13(d)(3) of the Securities
         Exchange Act of 1934, becomes the beneficial owner of shares of
         Southwest having twenty percent (20%) or more of the total number of
         votes that may be cast for the election of directors of Southwest, or
         (ii) as a result of, or in connection with, any cash tender or exchange
         offer, merger or other business combination, sale of assets or
         contested election, or any combination of the foregoing transactions
         (herein called a "Transaction"), the persons who were directors of
         Southwest before the Transaction shall cease to constitute a majority
         of the Board of Directors of Southwest or any successor to Southwest.

E.       VOLUNTARY TERMINATION. The Employee's employment hereunder shall
         terminate forthwith upon her resignation and its acceptance by
         Southwest, without further obligation or liability of either party
         hereunder, except for Southwest's obligation to pay Deferred
         Compensation as provided in Paragraph IV-C above.

                                VI. MISCELLANEOUS

A.       ASSIGNABILITY, ETC. The rights and obligations of Southwest hereunder
         shall inure to the benefit of and shall be binding upon the successors
         and assigns of Southwest; provided, however, Southwest's obligations
         hereunder may not be assigned without the prior



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         approval of the Employee. This Agreement is personal to the Employee
         and may not be assigned by her.

B.       NO WAIVERS. Failure to insist upon strict compliance with any provision
         hereof shall not be deemed a waiver of such provision or any other
         provision hereof.

C.       AMENDMENTS. This Agreement may not be modified except by an agreement
         in writing executed by the parties hereto.

D.       NOTICES. Any notice required or permitted to be given under this
         Agreement shall be in writing in the English language and shall be
         deemed to have been given to the person affected by such notice when
         personally delivered or when deposited in the United States mail,
         certified mail, return receipt requested and postage prepaid, and
         addressed to the party affected by such notice at the address indicated
         on the signature page hereof.

E.       SEVERABILITY. The invalidity or unenforceability of any provision
         hereof shall not affect the validity or enforceability of any other
         provision hereof.

F.       COUNTERPARTS. This Agreement may be executed in multiple counterparts,
         each of which shall be deemed an original but all of which taken
         together shall constitute a single instrument.

G.       ENTIRE AGREEMENT. This Agreement contains all of the terms and
         conditions agreed upon by the parties hereto respecting the subject
         matter hereof, and all other prior agreements, oral or otherwise,
         regarding the subject matter of this Agreement shall be deemed to be
         superseded as of the date of this Agreement and not to bind either of
         the parties hereto.

H.       GOVERNING LAW. This Agreement shall be subject to and governed by the
         laws of the State of Texas.



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         IN WITNESS WHEREOF, the Employee has set her hand hereto and Southwest
has caused this Agreement to be signed in its corporate name and behalf by one
of its officers thereunto duly authorized, all as of the day and year first
above written.

                                        SOUTHWEST AIRLINES CO.



                                        By: /s/ HERBERT D. KELLEHER
                                            ----------------------------------
                                            Herbert D. Kelleher
                                            Chairman of the Board of Directors






                                        THE EMPLOYEE


                                        /s/ COLLEEN C. BARRETT
                                        -------------------------------------
                                        Colleen C. Barrett

                                        Address:  P.O. Box 36611
                                        Dallas, Texas  75235-1611



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