We consider a quasi-static quantum Otto cycle using two effectively two-level systems with degeneracy in the excited state. The systems are coupled through isotropic exchange interaction of strength , in the presence of an external magnetic field which is varied during the cycle. We prove the positive work condition, and show that level-degeneracy can act as a thermodynamic resource, so that a larger amount of work can be extracted than from the non-degenerate case, both with and without coupling. We also derive an upper bound for the efficiency of the cycle. This bound is the same as derived for a system of coupled spin-1/2 particles [G. Thomas and R. S. Johal, Phys. Rev. E {\bf 83}, 031135 (2011)] i.e. without degeneracy, and depends only on the control parameters of the Hamiltonian, but is independent of the level degeneracy and the reservoir temperatures.

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