Related to a couple of topics discussed lately:
Aircraft embarking troops: http://taccmd.tacticalwargames.net/view ... 69&t=29315
Mantas carrying troops: http://taccmd.tacticalwargames.net/view ... 23&t=31057

When do we think units inside war engine transports count as being part of the same formation? Some occasions to consider:

Before activating the WE transport formation (e.g. during the opponent's activation)
When the WE transport formation activates
Generally throughout the WE's action
Only after the units disembark (the only thing the rules are explicit about)
After embarking a formation as well (especially aircraft, though the mechanism for picking up is different)

Mostly this affects the WE formation's break point but also its ability to use the transported units' special abilities such as Commander or Coordinated Fire - ones that don't require them to see anything. Note that the rules mention that the formations rally separately which kind of covers Leader (or at least half of it!). Note also that there are some other rules/FAQs/conventions that cover the ability to confer their abilities on other formations which might impact on your responses

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I have always played that the WE formation size is increased while it has troops onboard, even during the opponents turn.

This approach derives in part from a consideration of Ork WE transport which are part of a formation, but is also much simpler in my mind than than the alternatives where the answer depends on the circumstances and timing.

Just played a game using titans as transports and this came up. Are the two formations (titan infantry in CAP) and counted as one for purposes of BMs and being broken. In this case the reaver plus the hypaspists needing 16 (DC + infantry units) to break the formation or only 6 for just the reaver.
We played the two formations counting as one until disembarked. Though this makes the reaver really hard to break but easier to kill.

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I have always understood that they were counted as a single formation for assault resolution, though usually the troops disembark to fight. Note the transport is still the same DC and if killed, the contents all have to make an armour save which in the case of IG means the majority also die.

They'd be counted as a single unit for assault resolution as that's the exception to the rule, otherwise they'd be two separate formations. So 6BM to break the Reaver.

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Squats 2019-10-17

Next question. Can the infantry disembark on a withdraw move? Does anything happen to them since they are considered the same formation when disembarking. For example:
Titan gets broken via BMs from coming under fire. It withdraws 40cm to a different position, say in assault range of an enemy formation. Can the troops disembark at the end of the withdraw or can they stay inside and then activate disembark later and assault or shoot the enemy formation. If they can and are treated as the same formation when disembarking does the titan participate in the assault? If the troops disembark as part of the withdraw are they considered activated?

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Then can disembark on a withdraw move and they would already be counted as activated (so no shooting).

If they don't and the titan is later engaged they could disembark as their counter-charge (but not if they are trapped inside by 12 enemies basing the Reaver) and would fight in the assault. Regardless, they would still count as part of the Reaver's formation for the resolution.

As per 3.1.3:

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Squats 2019-10-17

Assuming the titan isn't engaged and the infantry are still inside after the withdraw, can they activate to perform an assault/advavnce/double etc as normal out of the titan? What about a marshal action can they remove BMs from the titan if they are considered the same formation when disembarking?

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They can't, that's why I linked to 3.1.3. If you don't disembark them with the withdrawal they're stuck in there until the end phase's withdrawals or the Reaver's next activation that includes a move.

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Squats 2019-10-17

E:A was written in a general principle that earlier sections can be modified by later sections; here the core rule on transports (1.7.5) is overridden by the later sections on WE, and again by air-transports.
Where the transport is part of the formation and not a WE, it uses 1.7.5, which states that troops disembark at the end of a move.

WE follow a similar principle, troops can only disembark at the end of the WE move. Also, to prevent "double moves", the WE cannot activate after troops have embarked.