The Megalith defense squadron was a squadron assigned to protect the missile launch facility, Megalith.
Following the annihilation of Yellow Squadron during Operation Autumn Thunder, a group of young Erusian officers ignored the cease-fire order and took control of Megalith. Somehow, they acquired fifteen Su-37 Terminators and, out of respect, painted them in the Yellow Squadron livery. Jean-Louis Flaubert was named as the squadron's leader, and they were tasked with defending Megalith in case the Independent State Allied Forces decided to launch an assault to destroy the facility.
On September 26, 2005, Megalith became operational and began operations to perform mass destruction on the Usean Continent and potentially restart the war. ISAF launched Operation Judgement Day and brought all of its pilots together in a new Mobius Squadron to face Megalith's defenders. In a long and heated battle, the entirety of the Megalith defense squadron was shot down and presumably killed. With Megalith's destruction immediately afterward, the squadron was disbanded.
The Megalith defense squadron, having been comprised of young Erusian officers who might have had minimal combat experience, was probably sub-par in combat capability. While flying Su-37 Terminators seemed to have made up for their lack of skill, it didn't do as much for their trust in their own abilities. For example, before Jean-Louis was shot down in battle, all of the pilots were confident and boisterous about their eventual victory over the "ribbons". After he was shot down, however, Gene was forced to take command and the pilots' attitudes completely reversed; all of them became more frantic, even though they still had someone in charge.