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If i choose one of those negtive traits...can i still upgrade/repair/overstrenght existing planes/arty or is this blocked too?

Can captured equipment upgraded either to improved version of itself or to german stuff within the same group?
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Can be closed, tested it myself.

A)With denied Aircraft you can still repair/overstrength Air units you got as gift/reward/capture/prototype and you can upgrade them to captured(Cache/Reward/...) or Prototype Stuff you got but nothing else.

b)Captured Equipment can be freely upgraded