My friend said she "couldn't be friends with a girl prettier than her"- red flag?

My friend and I were eating lunch together the other day, and she wanted to see my other friend's sister's instagram (the sister is an instagram model.) Well my friend and I both remarked on how pretty the sister is, because she is stunning, but then my said "I would kill myself if that was my sister." I asked her what she meant, and she said "I wouldn't be able to be friends with anyone prettier than me."

That comment made me feel icky, because does she mean then that she ranks her friends by looks? I personally wouldn't care if that was my sister because I like my looks as well, and I dont feel in competition with other girls. It also implies that she feels the need to be the "prettiest" out of her friends. Is that a weird comment she made or nah?
My friend said she "couldn't be friends with a girl prettier than her"- red flag?
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