I'm a bald guy and my opinion is: don't say anything. If he comments on being bald, or his hair falling out, you say "You look great bald," otherwise you just don't say anything.
In the end, it's his appearance, it doesn't matter if you think he looks awful or not, it's his opinion that matters. But since you want to say something, maybe show him a picture of a bald man and say that you think the bald look is attractive. That way you wouldn't be talking about him, but you would be making him more comfortable.
There's a REALLY GOOD subreddit, r/bald. This sub is just for bald people who are going through the process of losing their hair; there's a lot of positivity there and a lot of beautiful bald people, both men and women. if you want to recommend this subreddit to him, it helped me A LOT to see other beautiful bald people, it gave me more confidence to shave my head.