The screen fades to a beach lagoon scene on the Adriatic Sea in the 1920's.

Italian music is playing on an old-fashioned radio. The pig's face is covered with an open magazine as he relaxes on a beach by a lagoon. His seaplane, a Savoia S-2, is on the shore, and the small beach area is surrounded on all sides by high cliff walls. Later, we see some kids on a boat who are big fans of Porco's. The boat signals to Porco with semaphore flags, flashing Morse code lights, and even lines of people on deck forming an arrow. They're telling Porco that air pirates in that direction are kidnapping some kids. Then we switch to a map showing Porco flying one way and some other flyer heading a different way, then a masked figure stealing a bag of money. Porco's plane has a bit of an oil leak as he heads in the direction indicated by all the signals on the boat. Porco is popular with the ladies, based on all the waving and such.

The next day, Porco makes a trip to the bank and sees a military parade celebrating the rise of the Fascist party. He then goes to a gunsmith and gets a new machine gun for his plane.

Elsewhere, we see "Boss" and the pirates in a repaired seaplane (though now with a different plane's tail on, instead of the original skull-painted one) flying with a lot of other colorfully/whimsically-painted planes. "Boss" shouts, "Urusai!" (shut up!) so often that it's his trademark phrase. The colorful planes fly over a passenger ship and prepare to raid it. However, a hangar door opens at the front and two interceptors emerge, unfold their wings, and launch to engage the pirates. They quickly start to gain the upperhand, until Mr. Curtis engages them, quickly dispatching both.

Cut to Porco, relaxing on the beach of his lagoon. He is listening to his radio when his music is interrupted by a news report including a challenge from the air pirates, who have bags and bags of money. Porco gets in his seaplane and takes off through a natural archway in the cliff wall surrounding his private lagoon. He comments to himself about going on vacation in order to overhaul his engine and himself in Milan . . .whilst seeing lots of pretty girls.

Porco's plane rises through beautifully animated fog effects. As he rises above the clouds, he is met by Mr. Curtis's plane. They engage in a dogfight, which Porco loses when his engine fails and his plane falls down through the clouds. Mr. Curtis descends and searches from the air for Porco's wreckage amongst the tiny wooded islands that dot the area, but sees nothing. He lands his seaplane and finds a small chunk of Porco's wooden plane floating in the water. Assuming that Porco is dead, he leaves the area. However, Porco is hiding his ruined plane under the branches of some trees on one of the isles.

We switch scenes again. Gina's aboard a ship that's leaving the dock near the Hotel Adriano when a porter runs on the dock and shouts that's there's a phone call for her. She jumps from the deck to the dock, takes the call, and finds out it is Porco! It's been two days since the dogfight. Apparently, it took Porco that long to get back to civilization. When she realizes that he could have been killed, she shouts that he could have ended up as roast pork.

Next, we see Porco on the flatcar of a train with his wrecked plane under a tarp. Elsewhere, we see a 17-year-old Nausicaä look-alike named Fio at the Piccolo S.P.A. warehouse. (S.P.A. is Italian for "Inc." or "Co." or "Ltd.") Porco arrives and talks to a whiskered man whom Fio calls "Gramps" (is his real name Pergo?). When Fio is out of earshot, Porco asks Mr. Whiskers if he really IS Fio's grandfather, to which "Gramps" responds in a secretive manner, "Te dasuna yo!" ("Don't lay your hands on her!")

"Gramps" takes Porco to the machine shop in the warehouse, where we see a shiny new engine with "Ghibli" embossed on it in big letters. Porco bargains with "Gramps" over the cost of the new plane, commenting that he needs to save some money for food and lodging. “Gramps” replies that he will give him a good deal on room and board — and takes the last of Porco’s cash.

Fio arrives and sits herself down at the drafting board. When Porco asks what she is doing, she replies that she will design the rebuild of his plane. Porco thinks that is a terrible idea.

Later, in the warehouse, "Gramps" is counting Porco’s money. Fio comes in. She's quite talkative. Porco takes the money and Fio says, "Wait!" She then says something like, "What's the first prerequisite as a pilot? Experience?"

Porco answers, "No, inspiration."

"Fine. I heard you were quite young when you flew for the first time. Right?" she demands.

"1910. I was seventeen."

"Oh! the same age I am now," replies Fio.

She gives Porco a blanket, and seems happy despite Porco's efforts to give her the brush-off.

Next morning, in the Piccolo S.P.A. warehouse, we find Fio is still designing Porco’s plane, having been up all night working on it. Porco admits to being impressed with some of her design ideas, but he angrily says, "Only one person?" He's worried that she's going to make the plane all by herself.

A little later, a large group of schoolgirls and ladies arrive at the warehouse. They are all from Piccolo families and due to the men-folk having gone away to serve in the Italian military, they comprise the workforce. Porco maintains suave grace through it all. The women-folk set up tables, make spaghetti and prepare brunch. Then, except for Porco, they all pray. Fio notices this and winks at him.

In a shed next to the warehouse, "Gramps" and Porco test the new engine. The shed shakes from the force of air. Meanwhile--to the sound of jolly music—the ladies help build a new plane for Porco all that day. That night, we see Fio at the drafting board, designing late into the evening.

The next day, the wooden plane gets painted Italian Red. Porco, true gentleman that he is, kicks back and rocks a cradle while the ladies work hard on his plane. Again, Fio is up late designing.

Elsewhere, we see Porco in a black and white movie theatre watching a cartoon of an aerial dogfight. The old film stock is scratched. The cartoon looks like a tribute to old Max Fleischer cartoons, with a four-armed bug version of Betty Boop and a Gertie the Dinosaur look-alike. A heavily decorated Italian officer sits next to Porco in the theatre and they talk. He's an old friend of Porco's named Ferrarin. Porco leaves the theatre, and walks along the city street until Fio pulls up driving a big flatbed truck. Porco takes over the driving. Fio notices that they are being followed by another car. "Are you really a spy?" asks Fio. "Me?! A spy?!" he asks in return. Porco thinks that's hilarious. Realizing they are being followed, Porco makes an evasive turnaround in the street to escape the following car. It works, too.

Porco's new plane is finished. Fio says she's going too, having designed and built a small cubbyhole in the nose-section. "You've gotta be kidding!" roars Porco, but Fio just tells him to shush. She says she has a request and Porco is mad, but Fio becomes happy. Apparently, Porco owes extra money for the plane, and Fio is going to be his partner until he earns enough to pay the debts.

The plane has a crank to start the engine. The ladies open the warehouse doors and out fly Fio and Porco. There's a canal running next to the Piccolo S.P.A. warehouse, and across the river spies with guns open fire on Porco's new plane. He returns fire and ends up on the canal where he skims along the water rather than taking off. The ladies wave him off. He steers his seaplane like a speedboat down the canal, under bridges, and even has to rise onto one pontoon to avoid collision with an oncoming riverboat. Finally, the plane takes off. We see a pretty sunrise.

Another plane flies up to them. It's Ferrarin. Upon seeing Fio with Porco, Ferrarin signals "Buta ni shinju," by sign language ("Pearls before swine," or "What a waste"). Porco and Fio say thanks but when he's gone, Porco grumbles about him. They fly low over the countryside and then over the sea.

Elsewhere, Mr. Curtis is at an island villa. Gina is sitting alone in an island gazebo and Mr. Curtis comes up and flirts with her. He tells her that he can make her a big movie star if she'll come back with him to Hollywood. This smoothie even hands her a letter of some sort. She's cold to him and laughs at his offer. Then Porco flies overhead, doing aerial acrobatics, which causes Gina to recall a time from her youth--riding in a plane with a much younger Porco who then had a human face; she's riding an even older fashion plane with Marco Pagott (Porco's real name) as the pilot. In her memory, she asked Marco something as he was steering. As he looked over his shoulder to answer, a gust of wind raised her dress and he saw her petticoats blown around and he turned away, blushing. The flashback ends, and it's clear that Gina remembers the time fondly.

Up on the plane, Porco asks Fio something, and as she turns to answer, we can see both her face as Porco sees it, and a tiny version of it that Porco would see if he looked through the spyglass mounted on the front of the pilot's windshield.

Later, they land in the water for a gas fill-up. Fio complains about the price, but Porco replies that the price is both fair and that the station does not get much business. Porco goes ashore to a bar while a boy with cans of gas rows out to the plane and hand pumps the gas into Porco's plane. The boy seems either impressed at Fio's looks or surprised that a gal dares to fly with Porco.

Shortly thereafter, they take off and land at an islet, and go into a sea cave with the plane, which opens onto Porco's secret lagoon where he goes to relax. "Beautiful!" exclaims Fio. Porco has a tent pitched on the shore, but it appears to be inhabited . . . by the Skull Gang air pirates. The air pirates leap out of the tent and comically run down their leaders in their effort to surround Porco with dozens of guns. They spot Fio and they like her. The air pirates threaten to destroy Porco's plane so he cannot earn a livelihood.

Fio becomes indignant, saying she could not stand to see the plane she worked so hard upon be chopped into firewood. The air pirates are touched, and decide to break Porco up instead. However, Fio again berates them, chiding them for needing the help of an American and that Porco plans to challenge him.

Then, suddenly, someone laughs from high on the cliff wall. It's Mr. Curtis, who leaps from the wall and lands on his feet. Mr. Curtis walks over and flirts with Fio, actually going as far as asking her to marry him! She and Mr. Curtis talk, and he flips through a notebook listing Porco's unpaid bills. Essentially, Fio is claiming that the pirates can't kill Porco until his bills are paid. A deal is struck. There will be a fight the next day between Curtis and Porco. If Curtis wins, he can marry Fio. If Porco wins, Curtis will pay all of Porco’s debts.

"Boss" announces, "The air-pirate union will manage this duel!" to the Skull Gang, which leaves with Curtis. This leaves Porco and Fio alone by the lagoon again. Fio is sad for some reason, but her naturally buoyant nature comes back and she goes for a swim in the lagoon. Porco laughs.

That evening, when Fio is in a sleeping bag, Porco inspects his bullets. Half-asleep, Fio looks up at Porco’s face in the soft candlelight and is surprised to see that it is both human and handsome. Porco, hearing her, turns, but his face is back to “normal”.

"Why are you a pig?" she asks.

"Dunno," he answers, returning to inspecting his ammunition.

"So, may I kiss you?"

"Huh?"

"You know, in the fairy tale, the spell on a frog was broken by a kiss from a princess."

"Don't be silly. Save it for a more important moment."

"Then tell me a story."

Porco tells Fio a story of when he was a younger pilot in the Italian Air Service. His fellow fliers had a mass dogfight with the Imperial German Air Service. He was hit and awoke in his cockpit rising in a sea of milky clouds, silent and peaceful. Other fliers rose from the sea of clouds and ascended to a stream of thousands of other planes high above him. They were Porco's dead comrades and the German pilots they had killed. He cried out to his comrades, but they silently ascended into the stream as Porco’s plane sinks back into the clouds.

"...God?" asks Fio. Porco brushes off the possibility. Fio comments that she likes him despite his gruff manner. She hops out of her sleeping bag and gives him a quick kiss on the cheek.

The next day, we see a festive crowd on an islet. Many people have come by sailboat to see the duel, and Porco and Fio are there. "Boss" makes an announcement to the crowd and emphasizes his point by firing machine-guns over the heads of the astonished crowd. "Boss" pulls out a sack of money and offers Fio a chair. Apparently, there's going to be an aerial duel between Porco and Mr. Curtis, and the winner gets the sack of money. A photographer is going to take a picture of the Skull Gang air pirates, but "Boss" elbows the others out of the picture. Many onlookers place bets on Porco and Mr. Curtis. Fio and "Boss" watch the fight via binoculars and telescope. "Boss" reveals some information to Fio, which distresses her.

"That pig won't shoot," he says.

"Why?" asks Fio.

"You see, Curtis is still moving actively, so, if the pig shoots now, he might shoot the pilot, too. He'll shoot the engine when Curtis becomes tired. What a disgusting pig."

The dogfight pauses for a moment as the pilots fly side-by-side and exchange words instead of bullets. Curtis shouts, "Why don't you shoot? Are you making a fool of me? . . . Ha! I see! Your gun was broken!" but then Porco fires a short burst to show that his gun is in fact working.

They fly low over the flotilla of spectators' boats, and their stray bullets frighten the crowd and knock down the watchtower.

Elsewhere, Gina hears something in Morse code on a secret telegraph that she keeps hidden in a bookcase. . .

Meanwhile, the crowd is watching the ongoing dogfight. High-g accelerations cause the pilots' faces to ripple. As he lines up a perfect shot at Curtis’ engine, he discovers his gun has jammed. Porco tries to manually clear the jam, but fails. Curtis lines up his own shot, but is distressed to find that he already wasted all his ammunition trying to shoot Porco earlier. They fly alongside each other and Mr. Curtis pulls a pistol and fires at Porco by hand, but misses him. Porco throws the plane's hand crank at Mr. Curtis and hits him in the face. They land in the water next to the islet where the crowd is gathered.

The crowd surges toward the shore. Porco and Curtis have exited their planes and their confrontation has turned into a fistfight in knee-deep shore water.

Gina gets in her plane (marked with a "G" on the tail) and takes off.

Back at the fistfight, the two pilots look pretty awful, with faces that are beaten to a pulp. It's a boxing match for endurance now, with a clang on a frying pan to mark the end of rounds. As the combatants tire, it becomes a fight in slow motion. Porco loses a round. Gina comes in for a landing at the islet where they are. The fighters are so tired now, with eyes almost swollen shut, that their punches miss entirely. But as Gina's plane pulls up, they simultaneously knock each other out and both sink into the water. The referee starts to count. Gina calls to Porco who rises from the waves on the count of ten. He won! Gina says to the crowd, "The festival is over now. Italian forces are coming to arrest you all," and everyone disperses. "Boss" gives Fio the prize money.

Porco throws Fio on Gina's plane despite her protests. Fio kisses Porco, who gets knocked in the head by the plane's wing. (Note that after the scene where Fio kisses Porco, his face is never shown on screen again.) Then, Mr. Curtis and Porco remember that the Italian Air Force is coming to arrest them and so they, too, head for their planes.

Fio thinks about something while flying aboard Gina's plane.

Cut to a more recent era. The pirate gang characters are older. They have retired on their gambling winnings and lounge around the Hotel Adriano. Donald Curtis is a movie star and director in Hollywood. Curtis is wearing a cowboy hat and there is a dinosaur in the background. 

Fio keeps building planes, and every year, spends the summer at the hotel with Gina, waiting for Porco. . . . The film ends with her following narration:

"The Italian air force arrived to find nothing. I returned to Milan and became good friends with Gina. There have been wars and chaos since then, but our friendship has continued. After I took over the 'Piccolo' company, I made it a rule to spend summer vacations at the Hotel Adriano. Gina has become more beautiful over the years. The old gang still visits regularly. Oh, and Mr. Curtis, he writes to me sometimes, though he is not the president of the U.S. yet. He says he longs for that summer in the Adriatic. And as for how Gina's bet turned out, that's our secret."

During the credits, there are sketches, and then--as in KIKI'S DELIVERY SERVICE--one final animated scene . . . of a plane flying off into the clouds.