So technically.
Loose formation Will indeed stand up to a mele attack Just as well as close formation. becous the +1 armour bonus they receve is equal to the -1 defence they receve,

Also if there under fire the +1 Armour bonus Is better than +1 defence bonus,

And the only real penalty is the -2 morrale,
Which could lead to an earlyer rout if there in loose formation,
Where as if they were in close formation they prehaps would have stayed Just longenough to fend off the attack.
?