Comment 2 for bug 1663337

The default kernel is chosen by a baked-in preseed:

d-i base-installer/kernel/altmeta string hwe-16.04

When you use your own preseed, that one goes away, so you need to either specify that in your own, or add that to your boot cmdline, etc.

One could argue it's perhaps a general d-i misfeature that preseeds aren't additive/intersectional, but rather just override entirely, but that's a broader bug than this one.

(Patches welcome for improving this situation, but it's how HWE d-i has worked on x86 since precise or lucid, so certainly not a new behaviour here on s390x)