On a sunny weekend in the south of Germany last August, the new chief of EADS, Tom Enders, had a rare opportunity to relax and take some time for his hobbies, such as paragliding. And although many consider it a dangerous pastime, Enders had never been seriously injured. So why should this time be different?

As it turned out, Enders should not have jumped that day. The CEO hurt himself seriously enough during a landing that he had to cancel what might have been the most important business trip of his career and an historic meeting for the giant aerospace company he leads.

Enders had planned to accompany German Chancellor Angela Merkel on a state visit to China as part of the official delegation. Trips to China involve long flights and the chancellor's VIP Airbus A340 has enough room to allow private meetings. EADS's master plan for communications foresaw Enders meeting with Merkel on the flight to Beijing and having plenty of face time with her in which to make a concerted effort at winning her approval of a merger of EADS and BAE Systems.

That merger would have changed the landscape of the global aerospace industry. Not only would it have created by far the biggest company in the sector, with $100 billion in annual revenues, surpassing even mighty Boeing, it would also have provided remedies for many of the shortfalls the two companies individually suffer.

BAE Systems is a large defense contractor in the U.S. and some other overseas markets, but it does not really have a civil business anymore. With defense budgets declining, there are serious questions about what the future holds for a company with an exclusive defense exposure. Conversely, EADS is so dependent on Airbus that it has been seeking ways to strengthen its defense unit, Cassidian, for years, without much success. One of its big weaknesses is its tiny presence in the U.S., still by far the world's largest defense market. A combined EADS-BAE Systems group would have split revenues almost evenly between the civil and defense units, becoming a powerhouse like Boeing, only much larger.

And the deal would have led to much needed consolidation in a contracting global defense market. Surely the political implications would also have been felt down the road. Combining Europe's defense capabilities would have been a strong statement in politically challenging times.

But with Enders in medical treatment instead of flying with Merkel to Beijing, only a short telephone call could be scheduled between the two. Enders could do no more than outline the merger plans, make a quick pitch about the benefits he believed would accrue and seek Merkel's commitment to try to gain German government approval. A few weeks later, the deal was dead.

Angela Merkel, chancellor since 2005, was the one person to block what would have been the biggest merger in the global aerospace industry. It may not have led to the kinds of benefits business leaders outlined in their lobbying campaign, and by no means were all investors as convinced of its merits as the two companies. But it has been a long time since any government intervened in the aerospace industry so forcefully—and for purely political reasons, not over competition concerns.