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The Germans counterattacked and almost reached an ungarrisoned Lublin. My land units cut off the Germans but I couldn't reach the city by land so I tried to airdrop a paratroop unit in there. As you can see from the screenshot my para died while landing in a friendly city. (The para that is still on the map marched there overland).

How can a para die while landing in a friendly city? Does enemy AA reach two hexes?

The losses might be caused due to the enemy air activity.
Also there is a random factor added to the losses.