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This bug was fixed in the package cloud-init - 17.2-9-gdf24daa8-0ubuntu1

---------------
cloud-init (17.2-9-gdf24daa8-0ubuntu1) bionic; urgency=medium

  * New upstream snapshot.
    - tests: update apt sources list test [Joshua Powers]
    - tests: clean up image properties [Joshua Powers]
    - tests: rename test ssh keys to avoid appearance of leaking private keys.
      [Joshua Powers]
    - tests: Enable AWS EC2 Integration Testing [Joshua Powers]
    - cli: cloud-init clean handles symlinks [Chad Smith] (LP: #1741093)
    - SUSE: Add a basic test of network config rendering. [Robert Schweikert]
    - Azure: Only bounce network when necessary. [Chad Smith] (LP: #1722668)
    - lint: Fix lints seen by pylint version 1.8.1. [Chad Smith]

 -- Scott Moser <smoser@xxxxxxxxxx>  Mon, 15 Jan 2018 06:42:30 -0500

** Changed in: cloud-init (Ubuntu)
       Status: Confirmed => Fix Released

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https://bugs.launchpad.net/bugs/1722668

Title:
  Azure: bouncing of network device/publishing of hostname fails on
  artful

Status in cloud-init:
  Fix Committed
Status in cloud-init package in Ubuntu:
  Fix Released

Bug description:
  Launch an instance on Azure (20171005.1) and I find in /var/log/cloud-init.log
  the following:

  2017-10-10 21:16:25,598 - DataSourceAzure.py[WARNING]: Failed publishing hostname: Unexpected error while running command.
  Command: ['sh', '-xc', 'i=$interface; x=0; ifdown $i || x=$?; ifup $i || x=$?; exit $x']
  Exit code: 127
  Reason: -
  Stdout: -
  Stderr: -
  2017-10-10 21:16:25,598 - util.py[WARNING]: handling set_hostname failed
  2017-10-10 21:16:25,598 - util.py[DEBUG]: handling set_hostname failed
  Traceback (most recent call last):
    File "/usr/lib/python3/dist-packages/cloudinit/sources/DataSourceAzure.py", line 286, in bounce_network_with_azure_hostname
      prev_hostname=previous_hostname)
    File "/usr/lib/python3/dist-packages/cloudinit/sources/DataSourceAzure.py", line 637, in perform_hostname_bounce
      'env': env})
    File "/usr/lib/python3/dist-packages/cloudinit/util.py", line 2238, in log_time
      ret = func(*args, **kwargs)
    File "/usr/lib/python3/dist-packages/cloudinit/util.py", line 1847, in subp
      cmd=args)
  cloudinit.util.ProcessExecutionError: Unexpected error while running command.
  Command: ['sh', '-xc', 'i=$interface; x=0; ifdown $i || x=$?; ifup $i || x=$?; exit $x']
  Exit code: 127
  Reason: -
  Stdout: -
  Stderr: -

  The command output is  not captured, so we see in /var/log/cloud-init-
  output.log:

  + i=eth0
  + x=0
  + ifdown eth0
  sh: 1: ifdown: not found
  + x=127
  + ifup eth0
  sh: 1: ifup: not found
  + x=127
  + exit 127

  This is not surprising, there is no 'ifup' or 'ifdown', so the attempt to
  "bounce" the network device in order to re-publish the hostname that
  has been set will fail.

  ProblemType: Bug
  DistroRelease: Ubuntu 17.10
  Package: cloud-init 17.1-17-g45d361cb-0ubuntu1
  ProcVersionSignature: Ubuntu 4.13.0-12.13-generic 4.13.3
  Uname: Linux 4.13.0-12-generic x86_64
  ApportVersion: 2.20.7-0ubuntu2
  Architecture: amd64
  CloudName: Azure
  Date: Tue Oct 10 21:45:09 2017
  PackageArchitecture: all
  ProcEnviron:
   TERM=xterm-256color
   PATH=(custom, no user)
   LANG=C.UTF-8
   SHELL=/bin/bash
  SourcePackage: cloud-init
  UpgradeStatus: No upgrade log present (probably fresh install)
  user_data.txt:

  Related bugs:
   * bug 1674685: hostname ddns update is not done on azure with built-in agent path. 
   * bug 1574963: juju2 lxd launch hostname reverse lookup inconsistent

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