Top officials in the German government deflected blame, alleging discord between Paris and London over the size of the French government's stake in the combined group.
But two confidential sets of demands sent by the German government before and during the talks and described to Reuters, as well as conversations with senior officials in Germany and France, confirm that the roots of the failure lay far deeper.
The mega-deal fell apart because of Berlin's growing resentment of what it saw as its loss of influence within EADS, wariness about France - sometime rival, sometime partner - and suspicion about the motives of the firm's German CEO Tom Enders.
"We already have an imbalance on technology within EADS, to the benefit of the French. We didn't want to make this situation even worse by hooking up with BAE," a senior German official said.
Insiders say this could have disastrous consequences for the company. Some fear it will also tarnish ties between Berlin and Paris at a time when Merkel and French President Francois Hollande must find common ground to solve the crippling euro zone debt crisis.
"The fight that is happening now over Airbus is a grave threat," said an industry veteran with close ties to EADS. "Going back to a situation where you have to argue at the board over every industrial decision would be a disaster. That could really kill the company."