[smokinn]

You confront him.

It may make you uncomfortable but it needs to be done. You need to be up front with him and say that lately his performance has been unacceptable and that he needs to correct the situation.

Being honest about it will often fix the problem.

From your vocabulary and planned milestones and weekly status meetings I'm assuming you work for a large company. If he continues under-performing without valid reasons you start the process your company has for getting him fired. You call him in to your office to issue a formal warning with a copy given to HR and explain to him that he's on the path to getting fired if he still doesn't correct the situation. Depending on your company policy you can usually fire after 2 or 3 documented warnings. After the warning, if he still doesn't do anything about it you start putting out job offers for his position.

It's the only way his performance won't sap the energy of the entire team.