He said he did not now expect to see the creation of the multinational European Aerospace and Defence Company (EADC), which Europe's governments have called for.
"I think this dream has come to an end," Mr Schrempp said at DaimlerChrysler's annual results news conference.
Instead, there could be industry co-operation on specific projects and the company would keep an open mind on limited co-operation on both sides of the Atlantic, he said.
"As a transatlantic company we are looking at all possible options on this and the other side of the Atlantic," he added.
Dasa's chief, Manfred Bischoff, has already expressed his fury at BAe's decision in December to drop merger talks with Dasa in order to buy GEC's Marconi defence arm first, in a pounds 7bn deal. Nevertheless the extent of Dasa's anger at being left out of the European industry's first big merger move has taken much of the industry by surprise, not least BAe, industry sources said.
Having been jilted at the altar by BAe, Dasa has been fast closing off routes to reopening the talks. However, DaimlerChrysler's finance director, Manfred Gentz, yesterday hinted at a possible rapprochement, saying that creating a pan-European aerospace and defence group was now only "much more difficult" in the short term since BAe had agreed to buy Marconi.
Mr Gentz also said that DaimlerChrysler was willing to talk to potential American partners as the aerospace industry consolidates.