End capping of liquid crystalline poly(ethylene terephthalate-co-oxybenzoate) with a bifunctional 2-oxazoline derivative, 2-(4-allyloxyphenyl)-2-oxazoline, has been performed in melt under the condition of reactive processing and in a solution. The reaction in melt is very fast and, despite some modifier evaporation, it is completed in 2 min at 230 degrees C. The product is a polyester containing unsaturated end groups bonded via esteramide linkage. The presence of unsaturation was proved by C-13-NMR spectroscopy. An increase in temperature and prolongation of the processing time gives raise to thermal-induced reactions on the unsaturated end groups, resulting in an increase of the glass transition temperature. Depending on the processing temperature decomposition, propagation and crosslinking occur in different extent and influence polymer properties.