Don't say "I'm sorry", say "I'm sorry for your loss" or "I'm sorry to hear that". My grandpa passed away last month, and for some reason I didn't like it when people said just "I'm sorry".
If you could possibly say anything, tell your friend that... trying to find the right words here... that Father's Day is an important day, regardless where your father is, but I would imagine Father's Day should, and must be more important to him now. Not some random day. I see it as some sort of a blessing, all things considered, rather than the "worst day" for this to happen, then again I'm not in his situation. Father's should be celebrated, and to have that reminder, even though Father's Day doesn't fall on the same day every year, should be something that helps celebrate his life.
Just my thoughts I guess...
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