Young Pilot,
Do his instructors say he is genuinely making NO progress, or just learning more slowly than most and tending to forget things? There's a big diffference. If he really, really cannot learn to fly, maybe it's time for "the talk" as you call it. But if he's just struggling, slow, stressed, forgetful, he may well get there in the end. How does HE feel about the situation? You're his friend; surely you know.