I have the FZ28, which isn't as fast at focusing as the FZ38, or so I'm told. I've got some reasonable results of BIF, but I use different methods depending on how I feel at the time.
Two methods I use most are:
Aperture Priority + Spot focusing + Spot Metering + 12* zoom
Or; Multi Focusing (11 points) with the other settings the same.
I also often have the TCON17 attached, in which case the zoom might only be 8*.
Now you won't get any Swifts (believe me, I've tried), but then there's plenty of people with a DSLR that won't get a Swift in flight either. Gulls, Herons, Geese, Ducks, etc, are all possible, you just need to practice a lot (Gulls are good for this). If you're not worried about the noise reduction used (mine is on -2, but you can't change this in the Auto modes), you could try the Sports mode, providing you have good light, as it will give you a fast shutter speed.
BTW, I only ever use Manual Focus for tricky birds in foliage/reeds.
Here's a few examples from my gallery, none are DSLR quality, but that's because I don't have/want a DSLR:
EXIF data is embedded in each picture, so you can check what settings I used.
http://www.birdforum.net/gallery/showphoto.php/photo/286827/ppuser/69033
http://www.birdforum.net/gallery/showphoto.php/photo/300466/ppuser/69033
http://www.birdforum.net/gallery/showphoto.php/photo/314579/ppuser/69033
http://www.birdforum.net/gallery/showphoto.php/photo/268594/ppuser/69033
http://www.birdforum.net/gallery/showphoto.php/photo/268745/ppuser/69033
http://www.birdforum.net/gallery/showphoto.php/photo/284156/ppuser/69033