(Reuters) - Airbus Group and the Jeddah-based Islamic Development Bank (IDB) are seeding a sharia-compliant aircraft leasing fund to cater to growing demand for commercial financing from airlines in the Middle East, Asia and Africa.

The fund, which will exclusively finance Airbus aircraft, has a target size of $5 billion and could help boost the European planemaker's edge against rival Boeing in the fast growing commercial airline market in the Gulf region.

The European planemaker developed the fund together with Dubai-based Quantum Investment Bank and Palma Capital, and will seed it together with the IDB. Cayman-based International Airfinance Corporation will serve as fund manager.

Gulf airlines such as Etihad Airways, Emirates and Qatar Airways have transformed the aviation industry over the last decade through aggressive expansion, while Islamic finance is a growing element to win business in the region.

"Our main goal is to attract new sources of capital to our industry for the benefit of our customers. Our market has become a lot more international, in particular in the financial market," Yann Ballet, head of project and structured finance at Airbus Group, told Reuters.

With an order book that is heavily weighted towards Middle East and Asia, Airbus was keen to develop an Islamic finance solution to cater to that part of the world, he added.

But Schinfeld said he’s still hoping for last-minute approval, probably in the lame-duck session of Congress after the fall elections.