We propose a distributed formation control algorithm augmented with communication awareness. We consider autonomous underwater vehicles (AUVs) that are able to communicate over an acoustic link using a Time Division Multiple Access (TDMA) protocol, and to measure the Signal-to-Noise Ratio (SNR) of incoming messages. Based on the measured SNR and packet loss, we endow them with a distributed formation control scheme that accounts for the time-varying nature of the acoustic communication channel. This scheme allows a network of N AUVs to follow a pre-determined, twice-differentiable path while adapting their formation. The size of the formation is dynamically scaled by a formation adaptation mechanism to stabilize the estimated packet loss probability at a desired level. A distributed packet loss estimator is then built on top of the same average consensus routines used by the formation control algorithm, and thus comes with a minimal communication overhead. We test the algorithm by means of high-fidelity simulators, and verify its efficacy in making the network of agents retain formation-wide communication capabilities in a range of cases.