Well for quantal base images i had to add --addpkg linux-image-generic during base image creation. This is based on the information given in bug 1037607.
Just to make it clear the following is the command used to create the base image sudo ubuntu-vm-builder kvm quantal --kernel-flavour generic main restricted --rootsize 5G --addpkg openssh-server --addpkg linux-image- generic --arch i386 -- You received this bug notification because you are a member of Ubuntu Bugs, which is subscribed to Ubuntu. https://bugs.launchpad.net/bugs/1081721 Title: quantal to raring upgrade: do-release-upgrade fails to install the new kernel To manage notifications about this bug go to: https://bugs.launchpad.net/ubuntu/+source/update-manager/+bug/1081721/+subscriptions -- ubuntu-bugs mailing list ubuntu-bugs@lists.ubuntu.com https://lists.ubuntu.com/mailman/listinfo/ubuntu-bugs