Matt Cruse, having enrolled in the Airship Academy, has been stationed on the Flotsam, an old cargo ship that serves as his training vessel, and captained by Captain Tritus . All Airship Academy students are assigned a training vessel for two weeks, and as part of his training, Matt is assigned to partake in journeys made by the training vessel. During one trip, the ship flies through the Devil's Fist, a permanent storm in the Indian Ocean. After several dangerous maneuvers through wind drafts, the Flotsam levels. A vessel, drifting at 20,000 feet, is suddenly spotted from the crow's nest. Captain Tritus deduces that the vessel is the Hyperion, a long-lost ship of legend built for billionaire Theodore Grunel that is supposedly carrying great riches. Tritus foolishly attempts to tow the ship; however, he and most the crew are stricken with altitude sickness. Despite Tritus's protests, Matt brings the ship back down, after which he returns to the Airship Academy. He is told by the principal that he is failing and needs to increase his studying to pass the final exams. Matt then gets a request to meet a strange man named John Rath who requests the coordinates of the Hyperion. When the man is revealed to be a criminal in search of the Hyperion's loot, Matt escapes with a gypsy girl named Nadira. Matt, Kate, Nadira and Kate's chaperone, Ms. Simpkins, hire a man named Hal Slater, an accomplished pilot and captain of the Sagarmatha, to fly them to the Hyperion.
The group travels several days toward Skyberia, a cold and desolate area around the Antarctic. A large, squid-like creature that lives in the sky gets trapped in the ship's rudder. One of the crew members dies while trying to get it off the ship. Hal then allows Matt to become part of the crew. Kate and Hal begin to get along, causing Matt to feel jealous, and then Nadira and Matt kiss in the crow's nest shortly after, with Matt and Kate's relationship subsequently beginning to falter. They find out that there's a homing signal coming from the ship, and Hal immediately suspects Nadira because of both her secretive nature and because she's a gypsy. Matt realizes Rath put the beacon in the lining of his duffel. He interrupts Hal's rough search of Nadira's cabin where it is revealed her father was Vikram Szpirglas, a notorious pirate. Hal locks Nadira in her cabin for a day, but Matt and Kate persuade him to let her out. Soon after, they come across the Hyperion.
While exploring the skies in the ship, they learn from Grunel's diary that a man named "B" was searching for the Hyperion to plunder it. They dismiss "B" as a product of Grunel's diseased mind, but later find out that "B" is Barton, Rath's employer who wished to steal Grunel's work years ago. Grunel had been a brilliant inventor and scientist who also studied rare animals, and thus his work was quite valuable. It is revealed that Rath, Barton, and the rest of the group are also on an airship headed toward the Hyperion.
Using Hal's ship, the Sagarmatha, the gang finds the Hyperion and climbs aboard. They find a whole collection of rare animals and a blueprint of a machine that produces hydrium. Knowing that the blueprints will be worth millions, the gang tries to leave, but they are stranded on the ship when Rath and his men shoot at the Sagarmatha. Kate later reveals she knew that Matt and Nadira kissed, and she and Matt make up. After a battle onboard (during which the animals strike Rath and Barton, killing Barton but leaving Rath's fate unknown), the gang manages to escape the Hyperion in an ornithopter before the ship is destroyed. They lose the blueprints, but ultimately get away with 40 gold bars, found in a compartment of the ornithopter.