This bug was fixed in the package cloud-initramfs-tools - 0.35ubuntu2
--------------- cloud-initramfs-tools (0.35ubuntu2) zesty; urgency=medium
* cloud-initramfs-rooturl: add squashfs module to initramfs via manual_add_modules (LP: #1689642).
-- Scott Moser <email address hidden> Thu, 11 May 2017 16:59:05 -0400
This bug was fixed in the package cloud-initramfs -tools - 0.35ubuntu2
--------------- -tools (0.35ubuntu2) zesty; urgency=medium
cloud-initramfs
* cloud-initramfs -rooturl: add squashfs module to initramfs
via manual_add_modules (LP: #1689642).
-- Scott Moser <email address hidden> Thu, 11 May 2017 16:59:05 -0400