NEW YORK (TheStreet) -- Shares of Virgin America (VA) are surging 41.26% to $54.95 late Monday afternoon as Alaska Air Group (ALK) said it would acquire the airline for $2.6 billion, after a bidding war with rival JetBlue Airways (JBLU).

About 14.57 million of Virgin's shares were traded so far today, above its average volume of 931,401 shares per day.

The parent company of Alaska Airlines agreed to pay $57 per share in cash for Virgin.

"The combination expands Alaska Airlines' existing footprint in California, bolsters its platform for growth and strengthens the company as a competitor to the four largest U.S. airlines," the company said in a statement early this morning.

Alaska Air prevailed in the bidding war against JetBlue partially due to its clean balance sheet, which allows it borrow funds more easily for the deal, a source told the Wall Street Journal.

There was "a fierce back and forth between the two sides, with multiple bids for a number of days," but in the end, JetBlue "put the pencil down" because the price had become too high, the source added.

Under certain circumstances, Virgin would have to pay Alaska a $78.5 million fee if the deal is terminated, according to a regulatory filing cited by the Journal.

Shares of Alaska Air are down 4.66% to $78.19 on Monday afternoon on heavy trading volume.

Roughly 5.12 million of the company's shares were traded by this afternoon vs. its average volume of 1.14 million shares per day.

Separately, TheStreet Ratings Team has a "Hold" rating with a score of C- on Virgin stock.

The primary factors that have impacted the rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks.

The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and notable return on equity.

As a counter to these strengths, the team finds that we feel that the company's cash flow from its operations has been weak overall.

Recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. 

You can view the full analysis from the report here: VA