A Southwest Airlines flight had to make an emergency diversion after one of its engines ripped in two.

The Boeing 737-700, a commercial passenger jet which can carry around 150 people, was flying from New Orleans to Orlando when passengers heard a loud bang and saw one of the engines ripped open.

The plane landed safely in Pensacola International Airport in northern Florida at 9.40am, 10 minutes after the incident was reported, according to a statement from the airline.

Passengers said they feared for their lives during the incident.

“It was like an explosion,” Julie Stephens said. “I thought it was an attack and that the plane was going to go down.”

Another passenger said she saw smoke, and then when it cleared 'metal flapping'.

Southwest Airlines said the captain made the decision to land the plane early due to a mechanical issue with the number one engine. The airline reported no injuries among the 99 passengers and five crew members onboard.

Passengers were transferred to another plane and travelled on to Orlando later the same day.

Images of the engine shared by passengers on social media added to speculation the engine had blown up, but Southwest Airlines denied the incident was caused by an explosion.

A spokesman said the actual cause of the malfunction was still under investigation.

The National Transportation Safety Board also said it would investigate the “uncontained engine failure.”

The images show extensive structural damage to the engine nacelle which hangs underneath the wing.

A mechanic said the engine itself was actually intact, but the planes inlet cowl had been completely ripped away

"Most likely something structural let loose and the entire inlet ripped off," he said.

Passengers said after the loud ban, the plane tilted sideways.

"It just felt like half the plane almost capsized on the other side. I was kind of worried about that," passenger Travis Stephens told local media.

A drop in pressure in the cabin caused the oxygen masks to be deployed.

“We believe it was an isolated incident,” Mainz said, adding the airline will give passengers full refunds as well as $500 vouchers.

According to tracking data the 737 was flying around 30,700 feet and climbing before it began descending around 9:23 a.m. CDT, the Wall Street Journal reported.

Southwest Airlines is the largest operator of the single-aisle commercial passenger jet in the world, and ordered the 737-700 variant in 1993. The plane involved in the incident on Saturday was built in 2000.

Southwest Airlines has a history of near miss incidents. Ten people were injured in a botched landing in New York in 2013. In 2009 and 2011 a tearing away of part of two different aircrafts' fuselage skins triggered emergency landings.

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Passengers applauded the pilot when they touched down, and said they were grateful to be alive.