"I literally thought that was it, that this is how I'm going out," said Kimberly Zetsch.
Flight data showed that the plane descended from an altitude of 30,000 feet to 10,000 feet in just over eight minutes on Saturday.
A spokesperson from the airline told ABC News that the jet for SW flight 3472 suffered a "mechanical issue with the number one engine."
"We heard a loud boom at about 10,000 feet," passenger Stephanie Miller said. "Sounded like an 18-wheeler tire blowing, and we started smelling smoke."
Miller's pictures suggest the front casing of the left engine fell apart.
Another passenger, Vickie Fisher, said she knew the severity of the situation right away, "The noise and the shaking -- I knew instantly that this is not good."
ABC News' David Kerley said the metal shrapnel sliced into the tail of the jet and the fuselage, which breached the protection barrier for passengers. With pressure escaping from the cabin as a result, oxygen masks dropped from the ceiling and the pilots had to take quick action, bringing the aircraft into descent so that passengers could breathe.
Zetsch said, "I thought 'I'm not a really good swimmer. How am I going to get out of this?' Then I thought, 'It doesn't really matter -- this is it on impact.'"
"We just couldn't get to land fast enough," Miller said.
"This is very very rare and it's very dangerous because in this case the engine actually cut through a piece of metal into the cabin, and it was close to where somebody was sitting," said retired Marine Corps Col. Steve Ganyard, an aviation consultant for ABC News. "Somebody could easily have been killed."
Luckily, the flight landed safely, and none of the 99 passengers or five crew on board were injured.
According to Southwest, the plane is now out of service.
Those three passengers all credit the pilot and flight crew with getting them on the ground safely and keeping everyone calm. Passengers said the pilot checked in with each passenger personally to make sure no one was hurt.
ABC News' Michael Hayden contributed to this report.