What is the current status of this? Is Azure ready for cloud-init?
Here's a first pass at a PR for this: https://github.com/weldr/lorax/pull/899
If you can lorax-composer currently setup you can copy https://github.com/bcl/lorax/blob/rhel8-1754711/share/composer/vhd.ks into /usr/share/lorax/composer to try it out.
Since the problem described in this bug report should be
resolved in a recent advisory, it has been closed with a
resolution of ERRATA.
For information on the advisory, and where to find the updated
files, follow the link below.
If the solution does not work for you, open a new bug report.